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9 questions
When market interest rates fall, the price of an existing fixed-rate bond generally rises.
A bank with stable deposits and mostly long-term fixed-rate loans benefits when market interest rates rise.
Quantitative easing that expands central bank balance sheet always leads to proportional increases in broad money supply.
If the central bank raises the policy interest rate, which of the following is the most likely short-term effect on bond prices?
A 10-year zero-coupon bond yields 4% annually. If market yields unexpectedly rise to 5%, what happens to the bond's price and why?
Which statement best interprets a rising yield curve (long rates above short rates)?
A bank faces an increase in required reserve ratio. Which combination of effects is most likely?
An investor chooses between a dividend-paying stock and a non-dividend high-growth stock. Which factor most directly favors the dividend stock for an income-focused investor?
A bond portfolio has high duration. Which investor action best hedges the portfolio against a potential rise in interest rates?