Knowledge Base

← Financial Instruments, Crypto-Assets, and Their Risks

Questions

Yield to Maturity (YTM)

Click to see answer

Which factors influence a bond's duration?

Coupon level
Inflation rate
Default risk
Credit spread

Which elements are included in the calculation of a bond's value according to valuation principles?

Coupons and principal
Market price and credit spread
Inflation rate and default risk
Duration and convexity

What fundamental concept underlies the valuation of interest rate products?

Valuation based on future earnings
Discounted cash flow analysis
Historical cost method
Tangible asset valuation

What does a bond's sensitivity measure?

The absolute price change for a one basis point movement
The percentage price change for a 1% change in yield to maturity
The weighted average duration of cash flows
The risk premium embedded in the yield

The clean price is obtained by adding the accrued interest to the dirty price.

True
False

Categorize items by dragging them to the appropriate zones

Items to categorize:

Normal curve
Credit spread
Inverted curve
Risk premium
Categories:

Yield curve

Credit spread

A rise in market interest rates always causes the price of existing bonds to fall.

True
False