Use the Table for the Question(s)below

question 83

Multiple Choice

Use the table for the question(s) below.
Consider the following four bonds that pay annual coupons:
-Which of the four bonds is the most sensitive to a one percent increase in the YTM?

• A)Bond A
• B)Bond B
• C)Bond C
• D)Bond D

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Definitions:

Investment Center

A business unit or department that is responsible for its own revenues, expenses, and investment in assets, with its performance measured by its return on investment.

Controllable Margin

The portion of profit or income directly influenced by the management decisions, typically excluding fixed costs.

Required Return

The minimum expected return by investors for providing capital, based on the risk of the investment.

Operating Assets

Assets used in the daily operations of a business to generate revenue, such as machinery, building, and equipment.