The Outstanding Bonds of Alpha Extracts Have a Yield to Maturity

question 99

Multiple Choice

The outstanding bonds of Alpha Extracts have a yield to maturity of 7.4 percent and a modified duration of 11.8.If the yield to maturity instantly decreased to 6.8 percent,the bond's price would increase/decrease by ________ percent.

• A) -7.08
• B) -5.67
• C) 1.45
• D) 5.72
• E) 7.08

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Definitions:

Collusive Oligopoly

A market condition where a few companies or entities cooperate to restrict competition and control prices for their mutual benefit.

Price Leadership

A situation in which one company, the price leader, sets the price of goods or services within its market and other companies in the sector follow suit.

Sticky Prices

A situation where prices of goods and services are slow to change in response to changes in supply and demand or economic conditions.

Oligopoly Markets

Market structures characterized by a small number of large firms that dominate the market, leading to a high concentration of market power.