Interest Rates Have Increased by 50 Basis Points (0

question 54

Multiple Choice

Interest rates have increased by 50 basis points (0.5%) .Which of the following bonds will decline most in price? All of the bonds have AA ratings.

• A)A bond that matures in 10 days
• B)A bond that matures in five years
• C)A bond that matures in 10 years.
• D)All of the bonds will decline in price by approximately the same amount.

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