USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)

question 70

Multiple Choice

USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S)
XLR Corporation just issued a $1,000 par value bond with a 7 percent yield to maturity, twenty years to maturity, with an 8 percent semi-annual coupon rate.
-Refer to Exhibit 12.2. If market interest rates rise to 10 percent, what will the price of the XLR Corporate bond be in three years?

• A) $832.89
• B) $838.07
• C) $1097.63
• D) $1,102.85
• E) $1,191.43

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Definitions:

Trading Investment

An investment in securities with the intention of selling them in the short term to profit from price changes.

Interest

The cost of borrowing money, usually expressed as a percentage of the amount borrowed, paid by the borrower to the lender.

Market Rate

The current price or interest rate at which a good, service, or security can be bought or sold in a competitive marketplace.

Long-Term Investment

Investments in bonds, stocks, or real estate held for an extended period to generate revenue or appreciate in value, not intended for immediate sale.