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As interest rates rise, the duration of a perpetuity bond decreases.
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- When the bond prices rise, interest rates fall. True FalsEWhen bonds are issued at a discount, what happens to the carrying value and interest expense over the life of the bonds? O Carrying value and interest expense decrease. Carrying value decreases and interest expense increases. O Carrying value and interest expense increase. Carrying value increases and interest expense decreases. None of the above.if the market rate of interest is lower than the stated rate, bonds will sell at an amount ?
- When a bond sells at a discount, the carrying value ________ after each amortization entry. A. increases B. decreases C. stays the same D. cannot be determinedDoes interest expense increase or decrease when a bond premium is amortized?Is the price of a long term bond or the price of a short term security more sensitive to a change in interest rates? Why?
- Long-term bonds fluctuate more than short-term bonds as interest rates rise, making them a riskier investment. When interest rates rise, bond prices fall. A bond's coupon rate or interest rate determines the annual payment to the issuer. what does this mean?Interest-rate risk results from: a. Bond prices being fixed over the life of the bond b. Inflation being uncertain c. A mismatch between an individual's investment horizon and a bond's maturity d. The fact that most people hold bonds until they matureIf interest rates in the financial markets increase after a bond is issued, what will happen to the bond's price and to its yield to maturity? Does the length of time to maturity affect the extent to which a given change in interest rates will affect the bond's price?