What Happens to the Price of a Bond with a $100

question 24

Multiple Choice

What happens to the price of a bond with a $100 face value and an infinite maturity date when interest rates rise from 5 percent to 10 percent and the coupon paid on the bond is $20?

• A)The price falls by $100.
• B)The price rises by $200.
• C)The price rises by $100.
• D)The price falls by $1.
• E)The price falls by $200.

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Definitions:

Certain Forklift

A specific forklift unit, often identified for purposes such as sale, lease, or operational use in a defined context.

Offer Termination

Refers to the process by which an offer is revoked or ended before it is accepted, effectively nullifying the possibility of a contract.

Cure and Smoke

The process of preserving and flavoring food, particularly meats, by applying a combination of salt, nitrates, and sometimes sugar (curing) and then exposing it to smoke from burning or smoldering material, usually wood (smoking).

Revocation Effective

The point in time when the cancellation or withdrawal of a legal privilege, right, or contract becomes officially valid.