A Bond Has a Macaulay Duration of 6

question 22

Multiple Choice

A bond has a Macaulay duration of 6.25 years. What will be the percentage change in the bond price if the yield to maturity increases from 6% to 6.4%?

• A)−2.23%
• B)−2.43%
• C)−3.30%
• D)−3.38%
• E)−3.46%

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Definitions:

Financial Statements

Official records of the financial activities and position of a business, person, or other entity, presented in a structured manner.

Spot Rate

The current price in the foreign exchange market at which a currency can be bought or sold for immediate delivery.

Forward Rate

The agreed-upon exchange rate for a currency or commodity to be delivered and paid for at a future date.

Loan Payable

A liability account on the balance sheet representing the amount of borrowed funds that a company must repay to creditors.