Renter Og Obligationspriser Flashcards
What is the definition of interest rates?
Interest rates are the cost of borrowing money, expressed as a percentage of the total amount borrowed.
True or False: A higher interest rate typically leads to lower obligations prices.
True
Fill in the blank: A bond’s price is inversely related to its __________.
interest rate
What does the term ‘obligation’ refer to in finance?
An obligation refers to a financial instrument, typically a bond, that represents a loan made by an investor to a borrower.
Multiple Choice: What happens to bond prices when interest rates rise?
Bond prices generally fall.
What is the formula to calculate the yield of a bond?
Yield = (Coupon Payment / Current Market Price) x 100
True or False: The coupon rate is the interest rate that the issuer pays to the bondholder.
True
What is the relationship between bond duration and interest rate risk?
Longer duration bonds are more sensitive to interest rate changes, meaning they have higher interest rate risk.
Fill in the blank: A bond that is issued at a discount has a market price __________ than its face value.
lower
Multiple Choice: Which of the following factors can affect interest rates?
Economic growth, inflation, and central bank policies.
What is a zero-coupon bond?
A zero-coupon bond is a bond that does not pay periodic interest but is sold at a discount to its face value.
True or False: Longer-term bonds typically offer lower yields than shorter-term bonds.
False
What is meant by ‘credit risk’ in relation to bonds?
Credit risk refers to the risk that a bond issuer will default on its payment obligations.
Fill in the blank: The __________ is the date on which the bond’s principal amount is repaid.
maturity date
Multiple Choice: Which type of bond is considered the safest?
U.S. Treasury bonds.
