If Its Yield to Maturity Declined by 1%, Which of the Following

question 48

Multiple Choice

If its yield to maturity declined by 1%, which of the following bonds would have the largest percentage increase in value?

• A) a 1-year zero coupon bond
• B) a 1-year bond with an 8% coupon
• C) a 10-year bond with an 8% coupon
• D) a 10-year zero coupon bond

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Definitions:

True Value

The actual value of a parameter or variable that is typically estimated based on sample data.

Coefficient of Determination

This indicates the proportion of the variation in the dependent variable that can be explained by the independent variable(s) in a regression model, quantifying the predictive power of the model.

Units

Basic quantities or measurements used to express and compare physical quantities.

Sample Size

Refers to the number of observations or data points collected in a study or used in statistical analysis.