A Bond Has a Modified Duration of 7

question 48

Multiple Choice

A bond has a modified duration of 7.22 and a yield to maturity of 8.9 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:

Product Safety Standards

Regulations established to ensure that products meet minimal safety criteria to protect consumers.

Equal Credit Opportunity Act

A United States law that makes it unlawful for any creditor to discriminate against any applicant, with respect to any aspect of a credit transaction, on the basis of race, color, religion, national origin, sex, marital status, or age.

Extension Of Credit

An agreement to allow a purchaser to pay for goods or services at a future date, typically involving interest fees.

Fair Credit Reporting Act

A U.S. federal law designed to ensure the accuracy, fairness, and privacy of consumer information contained in the files of consumer reporting agencies.