Consider a 7-Year Bond with a 9% Coupon and a Yield

question 9

Multiple Choice

Consider a 7-year bond with a 9% coupon and a yield to maturity of 12%.If interest rates remain constant,one year from now the price of this bond will be _________.

• A) higher
• B) lower
• C) the same
• D) indeterminate

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Definitions:

Direct Method

An approach in cash flow statement preparation where major classes of gross cash receipts and payments are disclosed.

Support Departments

Units within an organization that provide essential services or support to frontline departments but do not generate revenue directly.

Cafeteria Department

A division within a company or institution that manages the operation of providing food services to employees, students, or residents.

Weighted Average Method

A cost accounting method that averages all costs of inventory available for sale during the period regardless of purchase date, to determine the cost of goods sold and ending inventory.