Everything Else the Same, If the Yield to Maturity Decreased

question 28

Multiple Choice

Everything else the same, if the yield to maturity decreased 1 percentage point, which of the following bonds would have the largest percentage increase in value?

• A) A 25-year 11% coupon bond.
• B) A 25-year 7.5% coupon bond.
• C) A 25-year zero-coupon bond.
• D) A 3-year zero coupon bond.
• E) A 3-year bond with a 7.5% coupon.

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Definitions:

Watercolor Landscape

A painting method using water-soluble pigments to depict natural scenery.

Memory Engram

A theoretical concept representing the physical manifestation of a memory within the brain.

Long-Term Retention

The process or ability to maintain and store information or material over extended periods.

Thought

The process of considering, reasoning, or reflecting, often leading to a form of mental judgement or idea.