A Pricing Theorem for the Bond Market States That a Decrease

question 30

Multiple Choice

A pricing theorem for the bond market states that a decrease in a bond's yield will raise the bond's ___ by an amount that is greater in size than the corresponding fall in the bond's price that would occur if there were an equal-sized increase in the bond's yield

• A) price
• B) coupon rate
• C) yield-to-maturity rate
• D) promised yield

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Definitions:

Standard Deviation

An index to assess the range of fluctuation or deviation in a series of numbers.

Daily Sales

The total revenue or units sold by a business during a single day.

Teleprocessing Transactions

Transactions carried out over a telecommunications network, commonly involving data exchange between computers.

Normal Distribution

A symmetric distribution regarding probabilities, centered on the mean, where data points close to the mean are more recurrent than distant ones.