Par Value Bond XYZ Has a Modified Duration of 6

question 25

Multiple Choice

Par value bond XYZ has a modified duration of 6.Which one of the following statements regarding the bond is true?

• A) If the market yield increases by 1% the bond's price will decrease by $60.
• B) If the market yield increases by 1% the bond's price will increase by $50.
• C) If the market yield increases by 1% the bond's price will decrease by $50.
• D) If the market yield decreases by 1% the bond's price will increase by $60.
• E) None of these.

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Definitions:

Sales Budget

A detailed projection of future sales, often broken down by product line, region, or sales channel, that guides business planning.

Quarterly Sales

The total revenue generated from the sale of goods or services within a three-month period.

Sales Price

The amount of money for which a product or service is sold to a customer.

Budgeted Cash Disbursements

An estimate of all cash payments that a business plans to make over a specific period, including expenses, purchases, and investments.