Answer the Question on the Basis of the Following Information

question 335

Multiple Choice

Answer the question on the basis of the following information for a bond having no expiration date: bond price = $1,000; bond fixed annual interest payment = $100; bond annual interest rate = 10 percent.If the price of this bond falls by $200, the interest rate will

• A)rise by 2.5 percentage points.
• B)rise by 5 percentage points.
• C)fall by 2.5 percentage points.
• D)fall by 5 percentage points.

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