Role of Interest rates in Valuation

If the holding period is shorter than the maturity period and there is a rise in interest with a fall in bond prices this will result in _________

Answer 1

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yield to maturity

reinvestment risk

interest rate risk

a capital loss

nominal interest rate

real risk-free rate

a capital gain

real interest rate

interest rate volatility

______ is the measure that most accurately reflects the interest rates

Answer 2

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yield to maturity

reinvestment risk

interest rate risk

a capital loss

nominal interest rate

real risk-free rate

a capital gain

real interest rate

interest rate volatility

Bonds whose term to maturity is shorter than the holding period are subject to

Answer 3

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yield to maturity

reinvestment risk

interest rate risk

a capital loss

nominal interest rate

real risk-free rate

a capital gain

real interest rate

interest rate volatility

_________ it especially important in the long-term bonds where the capital gains and losses can be substantial

Answer 4

Choose...

yield to maturity

reinvestment risk

interest rate risk

a capital loss

nominal interest rate

real risk-free rate

a capital gain

real interest rate

interest rate volatility