A Bond Has a Duration of 8 Years and a Present

question 41

Multiple Choice

A bond has a duration of 8 years and a present yield-to-maturity of 8%. If the yield-to-maturity rises to 10%, the approximate bond price change would be

• A) +7.9%.
• B) -25%.
• C) -14.8%.
• D) -12.9%.

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Definitions:

Capital Stock

The total amount of shares that a company is authorized to issue, representing the main source of equity for the company.

Preferred Stock

A class of ownership in a corporation that has a higher claim on assets and earnings than common stock, often with fixed dividend payments.

Common Stock

Shares of ownership in a corporation, giving holders voting rights and a claim on profits in the form of dividends.

Capital Stock

The total amount of a company's capital, represented by the shares of its stock.