A 1% Decline in Yield Will Have the Least Effect

question 69

Multiple Choice

A 1% decline in yield will have the least effect on the price of the bond with a _________.

• A) 10-year maturity, selling at 80
• B) 10-year maturity, selling at 100
• C) 20-year maturity, selling at 80
• D) 20-year maturity, selling at 100

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Definitions:

Average Operating Assets

The average value of assets used in the normal operation of a business, calculated over a specific period.

Net Operating Income

Net Operating Income is the total profit of a company after operating expenses are subtracted from operating revenues, excluding non-operating costs.

Residual Income

Income that remains after all operating expenses and costs of capital have been deducted from net operating income.

Profit Centre

A segment of a business that is responsible for both generating revenue and controlling costs, thereby directly influencing its own profitability.