You Own a 6

question 17

Multiple Choice

You own a 6.5 percent,semiannual coupon bond that matures in 12 years.The par value is $1,000 and the current yield to maturity is 6.4 percent.What will the percentage change in the price of your bond be if the yield to maturity suddenly increases by 25 basis points?

• A) -2.04 percent
• B) -2.11 percent
• C) -2.26 percent
• D) -2.31 percent
• E) -2.44 percent

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Definitions:

Sale Price

The final price at which an item is sold, after any discounts or promotions are applied.

Operating Expense

Recurring expenses incurred during regular business operations, such as salaries, utilities, and rent.

Operating Profit

Operating Profit refers to the profit earned from a firm's core business operations, excluding deductions of interest and taxes.

Selling Price

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