Consider a 3-Year Bond with a Par Value of $1,000

question 57

Multiple Choice

Consider a 3-year bond with a par value of $1,000 and an 8% annual coupon.If interest rates change from 8 to 6% the bond's price will:

• A) increase by $51.54.
• B) decrease by $51.54.
• C) increase by $53.46.
• D) decrease by $53.46.

---

Definitions:

Normal Random Variable

A variable that assumes any of the infinitely many values in a normal distribution curve.

Lifespan

The duration of time an organism, object, or process exists or functions until it ceases to do so.

Salmon Flies

Artificial fishing baits designed to imitate the adult form of salmon flies used in fly fishing.

Population

The entire group of individuals or instances about whom the research is concerned and to which the results of studies are intended to be generalized.