If Interest Rates in the Overall Economy Decrease to 6

question 72

Multiple Choice

If interest rates in the overall economy decrease to 6 percent, which one of the following is most likely to be the market value of a $1,000 corporate bond with a fixed interest rate of 7 percent?

• A) $400
• B) $1,100
• C) $900
• D) $1,000
• E) $700
• Since the market rate is less than the coupon rate, the market price should exceed $1,000.

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Definitions:

Stress

A physical or emotional response to demands or pressures, which can affect mental and physical well-being.

Physical Factors

Elements of the physical environment or bodily conditions that can influence health and well-being.

Psychological Factors

Elements of human behavior that influence how individuals think, feel, and act.

Sympathetic Nervous System

Part of the autonomic nervous system that controls the body's responses to stress and regulates bodily functions such as heart rate, digestion, and respiratory rate.