An 8%,15-Year Bond Has a Yield to Maturity of 10

question 2

Multiple Choice

An 8%,15-year bond has a yield to maturity of 10% and a duration of 8.05 years.If the market yield changes by 25 basis points,how much change will there be in the bond's price?

• A) 1.85%
• B) 2.01%
• C) 3.27%
• D) 6.44%
• E) none of these

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Definitions:

Private Securities Litigation Reform Act

A 1995 federal law that imposed several significant reforms on the process of bringing securities fraud lawsuits in order to reduce frivolous claims.

Auditor Liability

The legal responsibility of auditors for failing to detect and report inaccuracies or fraud in the financial statements they review.

SEC

Stands for the Securities and Exchange Commission, a U.S. government agency responsible for regulating the securities markets and protecting investors.

1934 Securities Act

U.S. legislation aimed at regulating the secondary securities market, requiring disclosure of material information related to securities transactions and aimed at combating fraud and manipulation.