Estimate the Percentage Price Change for a Five-Year, $1,000 Par

question 125

Multiple Choice

Estimate the percentage price change for a five-year, $1,000 par value bond, with a 6 percent coupon, if the yield rises from 8 percent to 8.5 percent. Interest is paid semiannually.

• A) 2.1 percent
• B) -2.1 percent
• C) 4.4 percent
• D) -4.4 percent
• E) 0 percent

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Definitions:

The Grange

Also known as the Patrons of Husbandry, a fraternal organization founded in 1867 to advance the social and economic needs of farmers in the United States.

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Electoral College

A body of electors established by the United States Constitution, tasked with electing the president and vice president of the United States.