Assume that all interest rates in the economy increase from 9 percent to 10 percent. Which...
Assume that all interest rates in the economy increase from 9 percent to 10 percent. Which of the following bonds will have the smallest percentage decrease in price?
| A. | A 1-year bond with a 5 percent coupon. | ||
| B. | A 5-year bond with a 10 percent coupon. | ||
| C. | A 5-year bond with a 5 percent coupon. | ||
| D. | A 1-year bond with a 10 percent coupon. | ||
| E. | A 10-year bond with a 10 percent coupon. |
Homework Answers
Option A is correct
1-year bond with a 5 percent coupon.
Bond having lower maturity and coupon rate have lower effect of change in interest rates.
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Assume that all interest rates in the economy increase from 9
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Well Supply offers 7.5 percent coupou boods with se p as ments and a yield to maturity of percent. The boods e n 10 Sears. What is the market price per bond if the face value is $100 A $698.86 B. $966.02 C. $864.10 D. $355.23 E. $971.47 + Global Communications has a 7 percent. semiannual coupon bond - standing with a current market price of $1.030. The bood has a partice of $1,000 and a yield to...
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