The present value of an investment increases as the opportunity cost rate (interest rate) increases.

a false

b true

Which of the following is the yield of a bond that offers a risk-free rate of 4% and a risk premium of 2%?

a 2%

b 8%

c 6%

d 12%

Which of the following bonds pays interest based on an inflation index?

a Income bonds

b Purchasing power bonds

c Treasury bills Floating-rate bonds

d Zero coupon bonds