A Bond Has a Duration of 7

question 61

Multiple Choice

A bond has a duration of 7.5 years.Its current market price is $1,125.Interest rates in the market are 7 percent today.It has been forecasted that interest rates will rise to 9 percent over the next couple of weeks.How will the bond's price change in percentage terms?

• A)The bond's price will rise by 2 percent.
• B)The bond's price will fall by 2 percent.
• C)The bond's price will fall by 14.02 percent.
• D)The bond's price will rise by 14.02 percent.
• E)The bond's price will not change.

Understand the principles behind the valuation of annuities and perpetuities.

Calculate the present value of annuities, both ordinary and growing, using different rates of return.

Understand the concept of financial saving goals and how to calculate future value towards achieving those goals.

Apply the concept of the time value of money to various financial planning and investment situations.

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Definitions:

Conduction Deafness

A type of hearing loss caused by a problem in the transmission of sound waves through the outer ear or middle ear.

Sensory-Neural Deafness

A type of hearing loss that occurs due to damage to the inner ear or the nerve pathways from the inner ear to the brain.

Central Deafness

A type of hearing loss which is caused by damage to the central nervous system rather than the ear itself.

Taste Receptor Cells

Specialized cells located on the taste buds of the tongue that detect chemical substances in food, allowing the perception of taste.