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

question 62

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 bond with a 12% coupon.
• E) A 10-year zero coupon bond.

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Definitions:

Sample Mean

The average of a set of numerical values taken from a sample of a population.

Standard Deviation

A metric that represents the extent of variability or spread within a group of numbers, demonstrating how far apart the values are from their mean.

Sample Observations

Specific instances from a larger population used to gather data and draw conclusions.

Probability

A measure of the likelihood that an event will occur, quantified as a number between 0 and 1, where 0 indicates impossibility and 1 indicates certainty.