The Required Rate of Return on a Certain Bond Changes

question 32

Multiple Choice

The required rate of return on a certain bond changes from 12 percent to 8 percent, causing the price of the bond to change from $900 to $1,100. The bond price elasticity of this bond is

• A)-0.36.
• B)-0.44.
• C)-0.55.
• D)-0.67.
• E)0.67.

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Definitions:

Stock Exchange

A marketplace where securities, such as stocks and bonds, are bought and sold.

TSX

The TSX refers to the Toronto Stock Exchange, a major global exchange located in Canada, primarily featuring Canadian-based companies.

Listing Requirements

Listing requirements are the criteria established by stock exchanges that companies must meet to be listed and continue trading on the exchange.

Ontario Securities Commission

A regulatory agency responsible for overseeing the capital markets in Ontario, Canada, ensuring fair and transparent practices.