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:

Average Product

In economics, the output per unit of input, such as labor or capital, calculated by dividing total production by the total quantity of the input used in production.

Local Factory

A manufacturing facility situated within a specific locality or geographic area, contributing to the local economy.

Productivity

The efficiency with which inputs (such as labor and capital) are converted into outputs like goods and services.

Separating Equilibrium

A situation in game theory or economic models where differing types, strategies, or qualities of players or products lead to distinct outcomes, separating them into different equilibrium points.