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If the expected rate of inflation increases, what will happen to the nominal rate of interest?
- It should go down
- It should go up
- It should stay the same
Two bonds are rated B+ and BB. Which is probably the riskier investment?
- They are the same
- B+ bond
- BB- bond
A typical bond is issued with a 5% coupon. If interest rates change to 6%, what happens to the coupon for this typical bond?
- It goes down.
- It doesn't change.
- It goes up.
Which has more credit risk: investment grade debt or speculative debt?
- Investment grade
- Speculative grade
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