Select the statement that correctly explains the relationship between interest rates and present or future value.

• Assuming other variables stay the same, if the interest rate increases, the present value of an investment decreases.

• The interest rate and the present value of an investment are directly related.

• Assuming other variables stay the same, if the interest rate increases, the future value of an investment decreases.

• Assuming other variables stay the same, if the interest rate decreases, the present value of an investment decreases.

Which of the following best describes a bond?

• A debt security that gives an investor an ownership share in the entity issuing the bond.

• A debt security that typically pays an investor a fixed rate of return for a specified period of time.

• A type of loan with a fixed rate of return that can be outstanding indefinitely.

• A debt instrument whose rate of return can fluctuate based on market conditions.

In calculating the yield of an investment, what is the relationship between APR and APY?

• APR can be higher or lower than the APY of a compounding investment, depending on how high the interest rate is.

• APR is always slightly lower than APY if an investment is earning compounding interest.

• APR is always slightly higher than APY if an investment is earning compounding interest.

• APR and APY are two ways of expressing the same measurement of yield.

Hans purchased a 20-year corporate bond in 2015 that promised to pay him 3% interest semi-annually for the life of the loan. The corporation reserved the right to redeem the bond in 2020. Which of those numbers is the bond's maturity?

• 20

• 3

• 2015

• 2020