A $5000 Bond with a Coupon Rate of 6

question 59

Multiple Choice

A $5000 bond with a coupon rate of 6.4% paid semiannually has four years to maturity and a yield to maturity of 6.2%. If interest rates fall and the yield to maturity decreases by 0.8%, what will happen to the price of the bond?

• A) fall by $98.64
• B) fall by $40.49
• C) rise by $142.78
• D) rise by $84.46

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Definitions:

Production Manager

A professional responsible for overseeing the production process, ensuring efficiency, meeting production targets, and maintaining quality standards.

Purchasing Agent

An individual or company responsible for buying goods and services for another company or organization.

Fixed Overhead Volume Variance

Fixed overhead volume variance is the difference between the budgeted and actual volume of production, multiplied by the fixed overhead rate, indicating efficiency in production volume.

Predetermined Fixed Overhead Rate

A rate used to allocate fixed overhead costs to produced goods, based on estimated costs and activity levels.