A 12-Year, 8 Percent Bond with a YTM of 12

question 17

Multiple Choice

A 12-year, 8 percent bond with a YTM of 12 percent has a Macaulay duration of 9.5 years. If interest rates decline by 50 basis points, what will be the percent change in price for this bond?

• A) +4.48 percent
• B) +4.61 percent
• C) +8.48 percent
• D) +8.96 percent
• E) +17.92 percent

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Definitions:

Valid Consideration

Valid consideration in a contract represents something of value that is given by all parties involved, serving as the reason or inducement to enter into the contract.

Adequacy Of Consideration

Refers to the fairness of the bargain in a contract, ensuring that what is exchanged holds reasonable value.

Detriment

A loss or harm suffered as a result of an action or decision.

Illusory Promise

A statement or promise that is vague or lacks commitment and does not legally bind the person making it.