If the Total Expenditures of a Typical Family Equaled $35,000

question 123

Multiple Choice

If the total expenditures of a typical family equaled $35,000 per year in 2010 and the exact same basket of goods and services cost $40,000 in the year 2015, the family's cost of living:

• A)increased by 14 percent.
• B)decreased by 12.5 percent.
• C)decreased by 14 percent.
• D)increased by 12.5 percent.

---

Definitions:

Par Value Bond

A bond that is selling for its original face value, as opposed to above (a premium) or below (a discount).

Modified Duration

A measure of the sensitivity of a bond's price to changes in interest rates, indicating the price change in percentage terms for a yield move of one percent.

Macaulay Duration

A measure of the weighted average time until a bond's cash flows are paid back, used to assess interest rate risk.

Yield To Maturity

The total return anticipated on a bond if held until it matures.