Consider a Bond with a Duration of 7 Years Having

question 104

Multiple Choice

Consider a bond with a duration of 7 years having a yield to maturity of 7 percent, and interest rates are expected to rise by 50 basis points. What is the percentage change in the price of the bond?

• A) 3.62 percent
• B) 3.45 percent
• C) -3.38 percent
• D) 3.38 percent
• E) -3.62 percent

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Definitions:

Sample Size

The number of observations or data points collected in a sample, which can influence the accuracy and reliability of statistical estimates.

Degrees of Freedom

Degrees of freedom refer to the number of values in a statistical calculation that are free to vary without violating the constraints of the calculation.

Population Standard Deviation

A measure of the dispersion or variability within a population data set, indicating how spread out the data points are from the mean.

Interval Estimate

An estimate of a population parameter that gives an interval believed to contain the parameter.