You Own Two Bonds

question 103

Multiple Choice

You own two bonds.Both bonds pay annual interest,have 6 percent annual coupons,$1,000 face values,and currently have 6 percent yields to maturity.Bond A has 12 years to maturity and Bond B has 4 years to maturity.If the market rate of interest rises unexpectedly to 7 percent,Bond _____ will be the most volatile with a price decrease of _____ percent.

• A)A; 5.73
• B)A; 6.08
• C)A; 7.94
• D)B; 3.39
• E)B; 4.51

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Definitions:

Stigma Consciousness

The awareness and concern over being stereotyped or judged by others based on a particular trait or characteristic.

Stereotype

A common, yet simplified and rigid perception or representation of a specific kind of individual or object.

Performance

The action or process of carrying out or accomplishing an action, task, or function.

Fact

A statement that can be proven true or false based on evidence or reality.