If Its Yield to Maturity Declined by 1%, Which of the Following

question 82

Multiple Choice

If its yield to maturity declined by 1%, which of the following bonds would have the largest percentage increase in value?

• A) A 1-year bond with an 8% coupon.
• B) A 10-year bond with an 8% coupon.
• C) A 10-year bond with a 12% coupon.
• D) A 10-year zero coupon bond.
• E) A 1-year zero coupon bond.

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Definitions:

Trade Barriers

Measures implemented by governments to restrict international trade, often aimed at protecting domestic industries.

Primary Currencies

The most widely used and traded currencies in the global foreign exchange markets, such as the US Dollar, Euro, and Japanese Yen.

Foreign Exchange Market

A global market for trading currencies against one another, determining the exchange rates.

U.S. Dollar

The official currency of the United States, used as a standard monetary unit in international trade.