You Own a 7 Percent, Semiannual Coupon Bond That Matures

question 13

Multiple Choice

You own a 7 percent, semiannual coupon bond that matures in 8 years. The par value is $1,000 and the current yield to maturity is 7.6 percent. What will the percentage change in the price of your bond be if the yield to maturity suddenly increases by 75 basis points?

• A) -4.37 percent
• B) -4.49 percent
• C) -4.54 percent
• D) -4.61 percent
• E) -4.77 percent

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Definitions:

Hebb's Theory

A theory in neuroscience proposing that neurons which fire together wire together, emphasizing the connection between neurons as the basis for learning.

Sensory Information

Data obtained from the environment through the senses, such as sight, hearing, smell, taste, and touch.

Arousal

A physiological and psychological state of being awake or reactive to stimuli.

Paradoxical Sleep

Another term for REM (Rapid Eye Movement) sleep, characterized by high brain activity and vivid dreaming, despite the body's muscles being in a state of paralysis.