Which of the following statements is incorrect? (Assume there is a single interest rate used to price all bonds.)

Question

Which of the following statements is incorrect?  (Assume there is a single interest rate used to price all bonds.)

Answer

When the interest rate rises, the prices of coupon-paying government bonds always fall

Answer

When the interest rate rises, the present values of cash flows that are far away fall

Answer

When the interest rate falls, the prices of coupon-paying government bonds always rise

Answer

When the interest rate rises, the present value of all future cash flows fall

Answer

When the interest rate rises, the present value of the principal amount rises

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