Quiz on ” Bonds – The Price of a Bond (Part 2) “

1. What is the relationship between bond prices and interest rates?

A) They have a direct relationship

B) They have no relationship

C) They have an inverse relationship

2. What happens to the price of a bond if its yield to maturity is lower than the coupon?

A) The price will be at a premium

B) The price will be at a discount

C) The price will be at par

3. What is the liquidity premium of a bond?

A) The difference between the expected price of a bond and the new increased price due to market stress

B) The part of the interest rate that affects a bond's price changes

C) The availability of the bond for trading and how easy it is to trade

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