A 6 Percent,semiannual Coupon Bond Has a Yield to Maturity

question 50

Multiple Choice

A 6 percent,semiannual coupon bond has a yield to maturity of 7.4 percent and a Macaulay duration of 5.7.The bond has a modified duration of ________ and will have a ________ percentage increase in price in response to a 25 basis point decrease in the yield to maturity.

• A) 5.4829; 1.35
• B) 5.4966; 1.32
• C) 5.4966; 1.37
• D) 5.3073; 1.33
• E) 5.3073; 1.38

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Definitions:

Surplus

A market condition where the quantity supplied exceeds the quantity demanded at a given price, often leading to downward pressure on prices.

Shortage

A market condition where the demand for a product exceeds its supply at a particular price.

Supply Of Ethanol

The total amount of ethanol available for purchase or consumption in the market.

Price Of Corn

Refers to the market rate or cost at which corn is bought and sold, influenced by factors such as supply and demand, weather conditions, and market trends.