A Bond Has a Modified Duration of 5

question 32

Multiple Choice

A bond has a modified duration of 5.87 years,a par value of $1,000,and a current market value of $1,008.What is the dollar value of an 01?

• A) $0.0698
• B) $0.0700
• C) $0.5917
• D) $0.6401
• E) $0.7023

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Definitions:

Systematic

Refers to a method or process being carried out using a fixed plan or system, in a thorough and organized manner.

Formal Operational Thinking

The stage in Jean Piaget's theory of cognitive development where individuals gain the ability to think abstractly, logically, and systematically.

Logical Necessity

A condition or proposition that cannot be otherwise because of the inherent nature of logic or rationality.

Metacognition

The ability to think about one’s own thought processes.