You Own Two Bonds, Each of Which Currently Pays Semiannual

question 27

Multiple Choice

You own two bonds, each of which currently pays semiannual interest, has a coupon rate of 6 percent, a $1,000 face value, and 6 percent yields to maturity.Bond A has 12 years to maturity and Bond B has 4 years to maturity.If the market rate of interest rises unexpectedly to 7 percent, Bond _____ will be the most volatile with a price decrease of _____ percent.

• A)A; 5.73
• B)A; 3.44
• C)A; 8.03
• D)B; 7.97
• E)B; 4.51

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Definitions:

Distributive Justice

A principle concerning the fair allocation of goods, resources, and burdens among members of a society.

Overtime Opportunities

Situations or options available within a workplace that allow employees to work beyond their regular hours for additional compensation.

Verbal Warning

An oral notice given to an employee about a performance or behavior issue that needs improvement.

Self-Identity

An individual's perception of themselves, formed by personal experiences, social relationships, and culture.