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What Is the Impact of a 50 Basis Point Increase

question 103

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What is the impact of a 50 basis point increase in interest rates on the net asset value of an open-end bond mutual fund holding a seven year, $100 million face value 7 percent annual coupon bond selling at par? The fund has 10 million shares.


Definitions:

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Skyrocketing Inflation

A situation where there is an extremely rapid and uncontrolled increase in the prices of goods and services in an economy.

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The participation of African-American citizens in the electoral process, which was significantly impacted by the Voting Rights Act of 1965, removing barriers to voting.

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