Par-Value Bond XYZ Has a Modified Duration of 6

question 75

Multiple Choice

Par-value bond XYZ has a modified duration of 6. Which one of the following statements regarding the bond is true?

• A) If the market yield increases by 1%, the bond's price will decrease by $60.
• B) If the market yield increases by 1%, the bond's price will increase by $50.
• C) If the market yield increases by 1%, the bond's price will decrease by $50.
• D) If the market yield increases by 1%, the bond's price will increase by $60.

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Definitions:

Product A

Not a real key term.

Indirect Labor

Wages paid to employees who are not directly involved in producing goods or providing services, such as maintenance and supervisory staff.

Activity Pools

In cost accounting, groups of tasks that have a similar cost driver in activity-based costing, helping allocate overhead costs more accurately.

Activity Rates

Metrics used in activity-based costing to allocate costs to products or services, based on activities that drive costs instead of traditional cost drivers like direct labor hours.