Consider a 7-Year Bond with a 9% Coupon and a Yield

question 79

Multiple Choice

Consider a 7-year bond with a 9% coupon and a yield to maturity of 12%. If interest rates remain constant, 1 year from now the price of this bond will be ________.

• A) higher
• B) lower
• C) the same
• D) indeterminate

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Definitions:

Encoding Failure

The inability to create a memory link because the information was not attended to or analyzed deeply enough.

Proactive Interference

The tendency for earlier learned material to interfere with the retention of new information.

Decay

The process of decline or deterioration over time, used in various contexts such as physical, biological, or psychological.

Retrieval Failure

Not remembering something one is certain of knowing.