What Is the Percentage Change in a 5-Year Zero-Coupon Bond

question 18

Multiple Choice

What is the percentage change in a 5-year zero-coupon bond with a duration of 5 years,when interest rates increase from 9% to 10%?

• A)-1%
• B)-5.1%
• C)-4.7%
• D)-5%
• E)-4.5%

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Definitions:

Sampling Distribution

The layout of statistical probabilities derived from a random sample.

Sample Mean

The average value of a sample set of numbers, calculated by summing all the observations and dividing by the number of observations.

Miller Analogies Test

The Miller Analogies Test is a standardized test used primarily for graduate school admissions, assessing critical thinking and analytical reasoning through analogies.

Variance

A measure of the dispersion or spread of a set of data points around their mean value, indicating how spread out the data points are.