The yield on a bond and its price have an inverse relationship. If market interest rates rise, the price of an existing bond: MCQ with Answer and Explanation

Question

The yield on a bond and its price have an inverse relationship. If market interest rates rise, the price of an existing bond:

A. becomes zero

B. rises

C. remains unchanged

D. falls

Answer: Option D

Solution (By JKSSB Mock Tests)

When market interest rates rise, existing bond prices fall because their fixed coupon becomes less attractive.

This question belongs to: Economy GK Economy Set 1

Request complete Subject PDF

Discuss this Question (0)

No comments yet. Be the first to start the discussion!

Practice More Economy Set 1 Questions

Question #1

Share Report

The 'Goods and Services Tax Compensation Cess' is levied to compensate states for:

A. loss due to natural calamities

B. loss of revenue due to GST implementation for a transition period

C. loss of import revenue

D. loss due to bank failures

View Answer & Solution Discuss

Get Complete Subject PDF for Economy GK

Correct Answer: Option B

Explanation:
GST Compensation Cess compensates states for revenue loss due to GST implementation for five years.

This question belongs to: Economy GK Economy Set 1

Question #2

Share Report

The term 'Green Field Investment' refers to:

A. Setting up of new production facilities from scratch

B. Portfolio investment in bonds

C. Mergers and acquisitions only

D. Investment in existing companies through stock markets

View Answer & Solution Discuss

Get Complete Subject PDF for Economy GK

Correct Answer: Option A

Explanation:
Greenfield investment is a form of foreign direct investment where a parent company establishes new operations and facilities in a foreign country from the ground up.

This question belongs to: Economy GK Economy Set 1

Question #3

Share Report

In the context of public expenditure, 'Revenue Expenditure' is characterised by:

A. No creation of assets or reduction of liability

B. Creation of assets

C. Long-term capital formation

D. Reduction of liabilities only

View Answer & Solution Discuss

Get Complete Subject PDF for Economy GK

Correct Answer: Option A

Explanation:
Revenue expenditure is incurred for the normal running of government departments and does not result in the creation of assets or reduction of liabilities.

This question belongs to: Economy GK Economy Set 1

Explore All Economy Set 1 MCQs