What Must Be the Price of a $1000 Bond with a 5.8

question 13

Multiple Choice

What must be the price of a $1000 bond with a 5.8% coupon rate,annual coupons,and 30 years to maturity if YTM is 7.5% APR?

• A)$114.22
• B)$685.00
• C)$799.22
• D)$1005.26
• E)$184.26

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Definitions:

Marginal Product

The additional output resulting from the use of one more unit of a productive input, holding other inputs constant.

Production Function

An equation that describes the maximum output of a good achieved from a given number of inputs.

Input

The inputs such as labor, materials, or resources utilized in creating products and services.

Convexity

In economics and finance, convexity refers to the shape of the curve that demonstrates how the duration of a bond changes as the interest rate changes.