9-97 Using Present Value Bond Valuation Techniques,calculate the Exact Price

question 71

Multiple Choice

9-97 Using present value bond valuation techniques,calculate the exact price of the bond after the interest rate increase of 20 basis points.

• A)$1,007.94.
• B)$992.02.
• C)$992.06.
• D)$996.01.
• E)$1003.99.

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Definitions:

Exchange-rate Risk

The risk of losing money due to unfavorable changes in exchange rates when investing in foreign-denominated securities.

Hedged

In investment, using strategies to reduce or eliminate the risk of adverse price movements in an asset.

Futures Contract

A standardized legal agreement to buy or sell something at a predetermined price at a specified time in the future, often used for commodities or financial instruments.

Local Currency Returns

The performance of an investment denominated in the currency of the place where the investment is made, excluding the effect of foreign exchange rate fluctuations.