If a Bond Pays a Fixed Return of $500 a Year

question 137

Multiple Choice

If a bond pays a fixed return of $500 a year and the current interest rate has risen from 5 percent to 10 percent, then the bond price must have:

• A)risen from $25 to $50.
• B)fallen from $50 to $25.
• C)risen from $5, 000 to $10, 000.
• D)fallen from $10, 000 to $5, 000.
• E)risen from $1, 000 to $5, 000.

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Definitions:

Unconscious Thoughts

Mental processes that occur without conscious awareness, influencing feelings, thoughts, and behaviors in ways not immediately accessible to introspection.

Past History

Past history is a record or account of events, actions, or conditions that happened in the past.

Overt Behavior

Observable actions or responses of an individual, which can be directly seen and measured by others.

Operant Conditioning

A learning process through which the strength of a behavior is modified by reinforcement or punishment.