If Interest Rates Increase from 3% to 4%, a $100,000

question 91

Multiple Choice

If interest rates increase from 3% to 4%, a $100,000 25 year bond with a duration of 21 years would ________ in price by approximately ________.

• A) increase; 24.3%
• B) decrease; 24.3%
• C) increase; 20.4%
• D) decrease; 20.4%

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Definitions:

Law Of Effect

A principle in psychology that behaviors followed by positive outcomes are likely to be repeated, while those followed by negative outcomes are less likely to be repeated.

Operant Conditioning

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

Operant Conditioning

A learning process through which behavior is shaped and maintained by its consequences, including reinforcements and punishments.

Extinction

Extinction in behavioral psychology refers to the gradual weakening and disappearance of a conditioned response when the reinforcement is no longer provided.