If the Yield to Maturity Decreased 1 Percentage Point, Which

question 87

Multiple Choice

If the yield to maturity decreased 1 percentage point, which of the following bonds would have the largest percentage increase in value?

• A) A 1-year bond with an 8 percent coupon.
• B) A 1-year zero-coupon bond.
• C) A 10-year zero-coupon bond.
• D) A 10-year bond with an 8 percent coupon.
• E) A 10-year bond with a 12 percent coupon.

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Definitions:

Balance Sheet

A Balance Sheet is a financial statement that summarizes a company's assets, liabilities, and shareholders' equity at a specific point in time, providing insight into its financial condition.

Service Revenue

Service revenue is the income a company generates from providing services, as opposed to selling physical goods.

Asset Increase

A rise in the total value of a company's assets, which can result from additional investments, improved asset values, or acquisition of new assets.

Creditor

An individual or institution to which money is owed.