An FI Purchases at Par Value a $100 000 Treasury

question 47

Multiple Choice

An FI purchases at par value a $100 000 Treasury bond paying 10 per cent interest with a 7.5 year duration. If interest rates rise by 4 per cent, calculate the bond's new value. Recall that Treasury bonds pay interest semi-annually. Use the duration valuation equation.

• A) +$28 571.43
• B) -$20 864.46
• C) +$20 864.46
• D) -$28 571.43

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