A $1000 Bond with a Coupon Rate of 5

question 51

Multiple Choice

A $1000 bond with a coupon rate of 5.4% paid semi-annually has five years to maturity and a yield to maturity of 7.5%.If interest rates rise and the yield to maturity increases to 7.8%,what will happen to the price of the bond?

• A)fall by $9.82
• B)fall by $11.58
• C)rise by $12.16
• D)rise by $10.06
• E)The price of the bond will not change.

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Definitions:

Specialized Role

A position that requires specific skills and knowledge, tailor-made to perform particular tasks within an organization.

Social Process

An ongoing sequence of interactions and adjustments between individuals or groups in a society, shaping cultural and social development.

Descriptive Theory

A theory that explains how something works or describes the characteristics and behaviors of phenomena without making predictions.

Trait Approach

A leadership theory that suggests certain characteristics or personality traits are inherent in effective leaders and that these traits can be identified and developed.