Consider a Bond with a Duration of 8 Years Having

question 68

Multiple Choice

Consider a bond with a duration of 8 years having a yield to maturity of 8% and interest rates are expected to rise by 50 basis points.What is the percentage change in the price of the bond?

• A) 3.85%
• B) 3.45%
• C) -4.02%
• D) -3.45%
• E) -3.85%

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Definitions:

New Stock

Shares that have been issued to the public for the first time through an initial public offering (IPO) or additional issuance.

Corporation Control

The exercise of authority and management over the operations and strategic direction of a corporation, often through ownership or a controlling interest.

Common Shares

A type of equity security that represents ownership in a corporation, granting voting rights and dividends to shareholders.