If Interest Rates Increase by 20 Basis Points, What Is

question 78

Multiple Choice

If interest rates increase by 20 basis points, what is the approximate change in the market price using the duration approximation?

• A)-$7.985
• B)-$7.941
• C)-$3.990
• D)+$3.990
• E)+$7.949 [Refer to: 9-102]

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Definitions:

Sales Returns

Goods returned to the seller by the buyer after the sale, leading to a reduction in sales revenue.

Discount Period

The timeframe within which a buyer can make payment less a discount for early settlement, encouraging quicker payment from customers.

Operating Expense Section

A part of the income statement that lists expenses related to the day-to-day operations of a business, excluding the cost of goods sold.

Wholesaler

An intermediary entity in the distribution channel that buys goods in bulk from manufacturers and sells them to retailers or other businesses, but not directly to consumers.