Short Test 4

Question 1

If the price of a treasury bill declines, the discount and the yield _____

Answer 1

Increases

Question 2

If the interest rates increase, the price of a ten year u.s. Treasury note ______, and principal ________

Answer 2

Decreases, stays the same

Question 3

An increase in the standard deviation of bond prices implies that risk ______

Answer 3

Increases

Question 4

Increases in the rate of inflation _____ the interest paid by tips and _____ the principal value of the bond

Answer 4

Increase, Increase

Question 5

If the price of a zero coupon u.s. treasury bond increases, interest rates have ______

Answer 5

Decreased

Question 6

A decrease in the CPI causes the interest paid by a tip to ______

Answer 6

Decrease

Question 7

An increase in tax rates ______ the attractiveness of municipal bonds

Answer 7

Increases

Question 8

A decrease in the yields on municipal bonds may be the result of________ income tax rates

Answer 8

Increase

Question 9

Purchasing a general obligation bond instead of a revenue bond _______ risk

Answer 9

Decreases

Question 10

An increase in inflation ______ the risk associated with investing in treasury securities

Answer 10

Increases