Exhibit 18.2 Use the Information Below for the Following Problem(S)

question 27

Multiple Choice

Exhibit 18.2
Use the Information Below for the Following Problem(S)
Talmart Corporation bonds have a $1,000 face value and will mature in 4 years. The bonds have a 7% coupon rate. Interest is paid annually and the required rate of return is 6 percent for these bonds.
-Refer to Exhibit 18.2.If interest rates increase 50 basis points,what will be the approximate price change for the Talmart bond?

• A) -17.0%
• B) -1.7%
• C) 1.7%
• D) 1.8%
• E) 17.0%

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Definitions:

Fixed Manufacturing Overhead

Expenses related to production that do not change with the level of output, such as rent, salaries of permanent staff, and depreciation of factory equipment.

Work in Process

Inventory items that are in the manufacturing process but have not yet completed production.

Cash Account

An account that records cash transactions, including both incoming and outgoing cash flows, essential for effective financial management.

Raw Materials

The basic materials from which products are made, usually processed in several stages in the production cycle.