17-64 What Is the Impact of a 50 Basis Point

question 44

Multiple Choice

17-64 What is the impact of a 50 basis point increase in interest rates on the net asset value of an open?end bond mutual fund holding a seven year,$100 million par value 7 percent annual coupon bond? The fund has 10 million shares.

• A)An increase of $0.24 per share.
• B)A decrease of $0.265 per share.
• C)An increase of $0.05 per share.
• D)A decrease of $0.05 per share.
• E)An increase of $0.265 per share.

---

Definitions:

Crime

Activities that violate the laws of a society and are punishable by authorities.

Execution Costs

Expenses associated with carrying out or implementing a project, policy, procedure, or capital punishment, including planning, administration, and operational expenses.

Taxpayer

An individual or entity that is legally obligated to pay taxes to a federal, state, or local government.

Maximum-Security Prison

A facility designed to house the most dangerous inmates, featuring strict security measures and limited freedoms.