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:

Consensus

A general agreement among the members of a group or community.

Averaging

A statistical method used to combine or consolidate multiple values or measurements into a single mean or average value.

Risky Shift

The tendency for groups to make decisions that are more extreme, including riskier or more cautious, than the initial leanings of its members.

Superior Memories

Refers to an exceptional ability to remember and recall information compared to the average cognitive functions.