A bond's price and its yield to maturity are inversely related because
A) discounting future payments at a higher rate reduces the present value of the payments.
B) discounting future payments at a higher rate increases the present value of the payments.
C) an increase in the yield to maturity will lower a bond's coupon rate and hence its price.
D) a fall in a bond's price will lower its par value and hence its yield to maturity.
A
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Mary takes out a fixed interest rate loan and then inflation rises more than expected. The real interest rate she pays is
A. higher than she'd expected, and the real value of the loan rises. B. higher than she'd expected, and the real value of the loan falls. C. lower than she'd expected, and the real value of the loan rises. D. lower then she'd expected, and the real value of the loan falls.
Yield on a bond refers to:
a. the coupon-rate of the bond. b. the money earned by selling a bond. c. the return from a bond after its maturity. d. the difference between the face value of a bond and the bond price. e. the annual return until the bond matures.