18. Which of the following are true for a coupon bond?

a. When the coupon bond is priced at its face value, the yield to maturity equals the coupon rate.

b. The price of a coupon bond and the yield to maturity are negatively related.

c. The yield to maturity is greater than the coupon rate when the bond price is below the par value.

d. All of the above are true.

e. Only (a) and (b) of the above are true.

19. Which of the following are true concerning the distinction between interest rates and return?

a. The rate of return on a bond will not necessarily equal the interest rate on that bond.

b. The return can be expressed as the sum of the current yield and the rate of capital gains.

c. The rate of return will be greater than the interest rate when the price of the bond rises between time t and time t+1.

d. All of the above are true.

e. Only (a) and (b) of the above are true.

20. Which of the following are generally true of all bonds?

a. The only bond whose return equals the initial yield to maturity is one whose time to maturity is the same as the holding period.

b. A rise in interest rates is associated with a fall in bond prices, resulting in capital losses on bonds whose term to maturities are longer than the holding period.

c. The longer a bond's maturity, the greater is the size of the price change associated with an interest rate change.

d. All of the above are true.

e. Only (a) and (b) of the above are true.

21. The _____ states that the nominal interest rate equals the real interest rate plus the expected rate of inflation.

a. Fisher equation.

b. Keynesian equation.

c. Monetarist equation.

d. Marshall equation.

22. Holding everything else constant,

a. if an asset's risk rises relative to that of alternative assets, the demand will fall.

b. the more liquid an asset, relative to alternative assets, the greater will be the demand.

c. the lower the expected return relative to alternative assets, the greater will be the demand.