Which of the Following Bonds Will Have the Largest Percentage

question 9

Multiple Choice

Which of the following bonds will have the largest percentage increase in value if interest rates decrease by 1%?

• A) 2-year, 5% coupon bond
• B) 30-year, 10% coupon bond
• C) 10-year, zero coupon
• D) 30-year, zero coupon

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Definitions:

European-Style

Referring to something, such as design, fashion, or cuisine, that is characteristic of or influenced by European traditions and cultures.

Gradual Emancipation

A legal process through which the emancipation of slaves was made to occur slowly over a period of time, rather than immediately.

Legislature Abolished

The disbandment or termination of a legislative body, which is an assembly with the authority to make, amend, and repeal laws.

Slavery

A socio-economic system in which individuals are owned by others, forced to work without pay, and considered legal property.