Skip to content
We use only essential cookies to keep you signed in and remember your preferences. See our Cookie Policy.
TestStop
MocksPracticeResourcesIndiaBlogPricing
Sign in
Questions › UoH › UoH 2021 › Q6
1 mark, −0.33Macroeconomics › Time value of money and bond pricing › Bond prices, yields and no-arbitrageModerateabout 1 min

UoH 2021 Question 6: Time value of money and bond pricing

If the current rate of interest changes from 5%5\%5% to 4%4\%4%, the market value of a pre-existing bond changes by:

Tap an option to check your answer.

Answer and worked solution

Checking your account…

Plain-text version

If the current rate of interest changes from 5% to 4%, the market value of a pre-existing bond changes by: (A) +20% (B) +25% (C) -20% (D) -25%

Time value of money and bond pricing has come up 20 times in 5 exams since 2010.

What this question tests

This question is on Bond prices, yields and no-arbitrage, part of Time value of money and bond pricing in Macroeconomics.

How bond prices move with interest rates and what ties asset returns together.

TestStop has 8 past-paper questions on this subtopic; the nearest in year are below.

  • GATE 2023 · Q42Suppose Amar borrows Rs. 1000 from Ujala. After one year, Ujala wants Rs. 1100 back from Amar. The yield to…
Practise Time value of money and bond pricingMore on Bond prices, yields and no-arbitrage

Similar questions from other papers

  • IIT JAM 2025 · Q52The present value of a perpetual cash flow of Rs.250 per year, discounted at the rate of 10% each year, is Rs..
  • UoH 2016 · Q44Which one is NOT TRUE about bonds?
  • UoH 2015 · Q47Assume you have the option to choose between receiving a given amount of money M 5 years from now or 10 years from now, and the discount rate is positive. Which option…
  • JNU SSS 2013 · Q51Suppose interest is compounded half-yearly at the rate of 10% per annum. If the present value of an asset, which returns a fixed sum of ₹ X after one year and nothing…

Question from the UoH 2021 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.