Assume Initially That Market Interest Rates Are 7% and the Bondholder

question 230

Multiple Choice

Assume initially that market interest rates are 7% and the bondholder is receiving a $70 coupon payment per year on a bond with a face value of $1,000. If market interest rates rise to 8%, the bond price:

• A) falls to $875.
• B) falls to $800.
• C) rises to $1,125.
• D) falls to $700.

---

Definitions:

Carbon Chain

A series of carbon atoms linked together, which can be straight, branched, or arranged in rings, forming the backbone of organic molecules.

Triglycerides

A type of fat (lipid) found in your blood, used by the body for energy but high levels can increase the risk of heart disease.

Glycerol

A simple polyol compound that serves as a building block for lipids and can be converted into glucose by the liver.

Fatty Acids

Long chains of hydrocarbon molecules that are components of fats and oils, important in diet and metabolism.