When Interest Rates Move from 9 to 10% Per Annum

question 84

Multiple Choice

When interest rates move from 9 to 10% per annum for a three-year bond paying a 9% per annum coupon,the:

• A) coupon rate becomes higher than the current market yield
• B) present value of the bond becomes higher than the face value
• C) current yield becomes higher than the coupon rate
• D) current price of the bond will increase

---

Definitions:

Nolo Contendere

Latin for “I will not contest it.” A criminal defendant’s plea in which he or she chooses not to challenge, or contest, the charges brought by the government. Although the defendant will still be convicted and sentenced, the plea neither admits nor denies guilt.

Guilty

A legal term describing someone formally convicted of a crime by a court of law.

Arraignment

A court proceeding in which a criminal defendant is formally charged and asked to enter a plea.

Plead Guilty

The act of admitting to the court that one committed the offense with which they are charged.