Jackson Central Has a 6-Year,8% Annual Coupon Bond with a $1,000

question 61

Multiple Choice

Jackson Central has a 6-year,8% annual coupon bond with a $1,000 par value. Earls Enterprises has a 12-year,8% annual coupon bond with a $1,000 par value. Both bonds currently have a yield to maturity of 6%. Which of the following statements are correct if the market yield increases to 7%?

• A) Both bonds would decrease in value by 4.61%.
• B) The Earls bond will increase in value by $88.25.
• C) The Jackson bond will increase in value by 4.61%.
• D) The Earls bond will decrease in value by 7.56%.
• E) The Earls bond will decrease in value by $50.68.

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Definitions:

Cultural Ideas

Concepts, beliefs, or values shared among members of a society or group that shape their practices, behaviors, and interactions.

Ethnic Group

A community or population made up of people who share a common cultural background, heritage, language, or religion, which differentiates them from other groups.

Amish

A group of traditionalist Christian church fellowships known for simple living, plain dress, and reluctance to adopt many conveniences of modern technology.