A Bond Has a Modified Duration of 7

question 91

Multiple Choice

A bond has a modified duration of 7.22 and a yield to maturity of 8.1 percent.If interest rates increase by 75 basis points,the bond's price will decrease by ________ percent.

• A) -0.46
• B) -0.54
• C) -4.60
• D) -5.42
• E) -6.18

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Definitions:

Linear Regression Equation

The linear regression equation is a mathematical formula used to describe the relationship between a dependent variable and one or more independent variables.

Pearson r

A statistic representing the degree of linear correlation between two variables, ranging from -1 to 1.

Years of Education

The total number of years spent in formal education, from the beginning of primary school to the highest level completed.

Linear Regression Equation

The linear regression equation is a mathematical formula used to predict the value of a dependent variable based on one or more independent variables, following a linear relationship.