Phil Owns a 7 Percent,semiannual Coupon Bond That Has a Face

question 1

Multiple Choice

Phil owns a 7 percent,semiannual coupon bond that has a face value of $1,000 and matures in 16 years.The bond has a current yield to maturity of 7.1 percent.What will the percentage change in the price of his bond be if interest rates decrease by 50 basis points?

• A) 4.33 percent
• B) 4.68 percent
• C) 4.91 percent
• D) 5.17 percent
• E) 5.26 percent

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Definitions:

Joint Probabilities

The likelihood of two occurrences taking place simultaneously.

Marginal Probabilities

The probability of a single event occurring, irrespective of the outcomes of other variables.

State Contracts

Agreements entered into by government entities for the procurement of goods and services, subject to specific regulatory and legal frameworks.

Construction Company

A business entity involved in the building of structures, infrastructures, and related activities.