Exhibit 18.1 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 16

Multiple Choice

Exhibit 18.1
USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
A $1000 par value bond with 5 years to maturity and a 6% coupon has a yield to maturity of 8%. Interest is paid semiannually.
-Refer to Exhibit 18.1. Estimate the percentage price change for this 5-year $1,000 par value bond, with a 6% coupon, if the yield rises from 8% to 8.5%. Interest is paid semiannually.

• A)2.1%
• B)-2.1%
• C)4.4%
• D)-4.4%
• E)None of the above

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Definitions:

Trade Deficits

A situation in which a country imports more goods and services than it exports, leading to a negative balance of trade.

King George III

Monarch of Great Britain and Ireland from 1760 until 1820, whose reign included significant events such as the American Revolutionary War and the Napoleonic Wars.

George Grenville

A British politician who served as Prime Minister and is known for implementing policies that contributed to the American Revolution.

British Revenue

Financial income generated by the UK government from taxes, levies, fees, and other sources.