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If the expected rate of inflation increases, what will happen to the nominal rate of...

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Finance

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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