Consider a Bond with a Duration of 6 Years Having

question 78

Multiple Choice

Consider a bond with a duration of 6 years having a yield to maturity of 8 percent, and interest rates are expected to rise by 50 basis points. What is the percentage change in the price of the bond?

• A) 2.88 percent
• B) 3.45 percent
• C) -3.89 percent
• D) -3.45 percent
• E) -2.88 percent

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Definitions:

Plan

A detailed proposal for doing or achieving something, often presented as a course of action or strategy.

Orderly Steps

Methodical and organized sequences of actions taken to achieve a specific goal.

Clarify

To make a statement or situation less confused and more comprehensible.

Leader Stance

The attitudes, behaviors, and strategies adopted by someone in a leadership position to guide and influence a group.