How are bond prices typically affected when prevailing interest rates increase? Option: Bond prices decrease, Bond prices remain unchanged, The effect is unpredictable, Bond prices increase

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How are bond prices typically affected when prevailing interest rates increase?

Bond prices decrease

Bond prices remain unchanged

The effect is unpredictable

Bond prices increase

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How does an increase in interest rates affect bond prices?

Impact depends on the bond type

No impact on bond prices

Bond prices increase

Bond prices decrease

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How do fluctuations in prevailing interest rates generally impact the valuation of existing fixed-income securities?

An inverse correlation exists: bond prices tend to rise as interest rates fall

A direct correlation exists: bond prices tend to decline as interest rates fall

The effect on bond prices is unpredictable and influenced by various market dynamics

Interest rate movements have a negligible impact on fixed-income security valuations

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What is the relationship between bond yields and bond prices?

No relationship

Unpredictable

Directly proportional

Inversely proportional

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What is the relationship between bond yields and bond prices?

Directly proportional

Depends on the type of bond

Inversely proportional

No relationship

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What is the relationship between volatility and option premiums?

Option premiums are not affected by volatility.

Option premiums decrease when volatility increases.

Option premiums increase when volatility increases.

Option premiums increase when volatility decreases.