Use the figure below to answer the following question(s) .
Figure 10-11
-In Figure 10-11,which of the following would most likely cause the movement from point E₁ to point E₂?
Definitions:
Bond's Price
The price of a bond is the present value of its expected future cash flows, such as interest payments and the return of principal at maturity.
Interest Rate Price Risk
The risk that the value of an investment will decrease due to a change in interest rates.
Zero Coupon Bond
A type of bond that does not pay interest during its life but is sold at a deep discount from its face value.
Reinvestment Rate Risk
The risk that cash flows from an investment will be reinvested at a lower interest rate than the original investment rate, affecting future returns.
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