9-104 Calculate the Percentage Change in This Bond's Price If

question 103

Multiple Choice

9-104 Calculate the percentage change in this bond's price if interest rates on comparable risk securities increase to 11 percent.Use the duration valuation equation.

• A)+4.25 percent.
• B)-4.25 percent.
• C)+8.58 percent.
• D)-3.93 percent.
• E)-3.84 percent.

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Definitions:

Investment

The allocation of resources (such as capital or time) with the expectation of receiving future returns.

Fair Value

The price that would be received for an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Unrealized Profits

Profits that have occurred on paper due to an asset's increased value but have not yet been cashed in by selling the asset.

Realized Profits

Refers to the gains earned and received from the sale of assets or investments, distinguished from those merely existing on paper.