O If the market interest rate (i) increases today, the Price of a Bond (P) today will decline. The following are correct statements about the impact of Market Interest Rate (i*) on value and return of a typical Coupon Bond, EXCEPT: The YTM of a Bond and the Market Interest Rate (i*) are the same value, even in the Short Term. O For a long term bond, if the Market Interest rate (i*) is expected to increase, the current Price of such Bond will Decline. For a two period Bond, if the Market Interest rate (i*) is expected to increase in the next period, the Expected Total Return (RET) on such bond will decline. Long Term Bonds are considered more risky than Short Term bonds, in part due to the risk associated to changes in future interest rates.

Question
O If the market interest rate (i) increases today, the Price of a Bond (P) today will
decline.
The following are correct statements about the impact of Market Interest Rate (i*) on
value and return of a typical Coupon Bond, EXCEPT:
The YTM of a Bond and the Market Interest Rate (i*) are the same value, even in
the Short Term.
O For a long term bond, if the Market Interest rate (i*) is expected to increase, the
current Price of such Bond will Decline.
For a two period Bond, if the Market Interest rate (i*) is expected to increase in
the next period, the Expected Total Return (RET) on such bond will decline.
Long Term Bonds are considered more risky than Short Term bonds, in part due
to the risk associated to changes in future interest rates.
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Transcribed Image Text

O If the market interest rate (i) increases today, the Price of a Bond (P) today will decline. The following are correct statements about the impact of Market Interest Rate (i*) on value and return of a typical Coupon Bond, EXCEPT: The YTM of a Bond and the Market Interest Rate (i*) are the same value, even in the Short Term. O For a long term bond, if the Market Interest rate (i*) is expected to increase, the current Price of such Bond will Decline. For a two period Bond, if the Market Interest rate (i*) is expected to increase in the next period, the Expected Total Return (RET) on such bond will decline. Long Term Bonds are considered more risky than Short Term bonds, in part due to the risk associated to changes in future interest rates.