If a Bond's Volatility Is 5% and Its Yield to Maturity

question 25

Multiple Choice

If a bond's volatility is 5% and its yield to maturity changes by 0.5% (points) then the price of the bond:

• A)changes by 5%
• B)changes by 2.5%
• C)changes by 7.5%
• D)will not change

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Definitions:

Micronutrients

Essential vitamins and minerals required in small amounts by the body for proper growth, development, and functioning.

Vitamins

Organic compounds that are essential in small quantities for the body's normal growth and activity.

Diet

The kinds of food that a person, animal, or community habitually eats, often tailored for health, religious, ethical, or weight-control reasons.

Minerals

Naturally occurring inorganic substances with a definite chemical composition and crystalline structure, essential for human health.