Which of the Following Bonds Will Be Most Sensitive to a Change

question 62

Multiple Choice

Which of the following bonds will be most sensitive to a change in interest rates?

• A)a ten-year bond with a $2000 face value whose yield to maturity is 5.8% and coupon rate is 5.8% APR paid semi-annually
• B)a 15-year bond with a $5000 face value whose yield to maturity is 7.4% and coupon rate is 6.2% APR paid annually
• C)a 20-year bond with a $3000 face value whose yield to maturity is 6.0% and coupon rate is 5.4% APR paid semi-annually
• D)a 30-year bond with a $1000 face value whose yield to maturity is 5.5% and coupon rate is 6.4% APR paid annually
• E)a five-year bond with a $10,000 face value whose yield to maturity is 6.4% and coupon rate is 6.8% APR paid annually

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Definitions:

Ratio Schedules

In operant conditioning, a reinforcement schedule that rewards a response after a specific number of behaviors have been performed.

Schedule-induced Behavior

Behavior that emerges as a byproduct of a specific schedule of reinforcement, not directly targeted by the reinforcement itself.

Fixed Interval

A schedule of reinforcement where the first response is rewarded only after a specified amount of time has elapsed.

Variable Ratio

A reinforcement schedule where the number of responses required to receive a reward varies, leading to high and consistent rates of response.