You Are Considering Three Different Bonds for Your Portfolio

question 6

Multiple Choice

You are considering three different bonds for your portfolio.Each bond has a 10-year maturity and a yield to maturity of 10%.Bond X has an 8% annual coupon, Bond Y has a 10% annual coupon, and Bond Z has a 12% annual coupon.Which of the following statements is CORRECT?

• A) Bond X has the greatest reinvestment rate risk.
• B) If market interest rates decline, all of the bonds will have an increase in price, and Bond Z will have the largest percentage increase in price.
• C) If market interest rates remain at 10%, Bond Z's price will be 10% higher one year from today.
• D) If market interest rates increase, Bond X's price will increase, Bond Z's price will decline, and Bond Y's price will remain the same.
• E) If the bonds' market interest rates remain at 10%, Bond Z's price will be lower one year from now than it is today.

Understand the characteristics and technological advances of the Neolithic period.

Identify the relationship between human societies and diseases historically.

Recognize the dietary and nutritional challenges faced by early human societies.

Describe the agricultural practices and their impact on human societies.

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Definitions:

Excess Capacity

The situation where a firm produces less than its total output capacity, often due to lack of demand.

Monopolistically Competitive

A market structure where many firms sell products that are similar but not identical, allowing for some degree of market power and price setting.

Long-Run Equilibrium

A state in which all inputs can be adjusted by firms, market supply equals demand, and there is no incentive for economic actors to alter their behavior.

Excess Capacity

The condition where a business produces less than the maximum amount possible, often leading to inefficiency.