4.Consider a fixed-income security that promises to pay $120 each year for the next four years Calculate the value of this four-year annuity if the appropriate discount rate is 6%per year. (a)$415.81 (b)$508.80 (c)$531.85 (d$629.06 Answer:(a) 5.The price of any existing fixed-income security when market interest rates rise because investors will only be willing to them if they offer a competitive yield. (a)rises;buy (b)rises;sell (c)falls;buy (d)falls;sell Answer:(c) 6.A fall in interest rates causes a in the market value of a fixed-income security. (a)arise (b)a fall (c)no change (d)it cannot be determined from the information given Answer:(a) 7.A change in market interest rates causes in the market values of all existing contracts promising fixed payments in the future. (a)a change in the same direction (b)a change in the opposite direction (c)no change (d)an unpredictable variation Answer:(b) 8-28-2 4. Consider a fixed-income security that promises to pay $120 each year for the next four years. Calculate the value of this four-year annuity if the appropriate discount rate is 6% per year. (a) $415.81 (b) $508.80 (c) $531.85 (d) $629.06 Answer: (a) 5. The price of any existing fixed-income security ________ when market interest rates rise because investors will only be willing to ________ them if they offer a competitive yield. (a) rises; buy (b) rises; sell (c) falls; buy (d) falls; sell Answer: (c) 6. A fall in interest rates causes a ________ in the market value of a fixed-income security. (a) a rise (b) a fall (c) no change (d) it cannot be determined from the information given Answer: (a) 7. A change in market interest rates causes ________ in the market values of all existing contracts promising fixed payments in the future. (a) a change in the same direction (b) a change in the opposite direction (c) no change (d) an unpredictable variation Answer: (b)