A $1000 Bond with a Coupon Rate of 5

question 2

Multiple Choice

A $1000 bond with a coupon rate of 5.4% paid semiannually has five years to maturity and a yield to maturity of 7.5%.If interest rates rise and the yield to maturity increases to 7.8%,what will happen to the price of the bond?

• A)fall by $9.82
• B)fall by $11.59
• C)rise by $12.16
• D)The price of the bond will not change.

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Definitions:

Agency vs. Structure

A sociological debate concerning the degree of individual free will (agency) versus the influence of social structures on behavior and attitudes.

Debate

A formal discussion or argument on a particular topic where opposing arguments are put forward.

Sociological Imagination

The ability to see the relationship between individual experiences and the larger society, understanding how societal forces shape personal life.

Quality of Mind

Concerns the cognitive attributes that allow an individual to engage thoughtfully and adaptively with their environment and experiences.