Which Bond Would Have the Greatest Percentage Increase in Value

question 79

Multiple Choice

Which bond would have the greatest percentage increase in value if all interest rates fall by 1%?

• A)10-year, zero coupon bond
• B)20-year, 10% coupon bond
• C)20-year, 5% coupon bond
• D)20-year, zero coupon bond

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Definitions:

Construction Crews

Teams of workers and professionals tasked with building, repairing, or demolishing structures.

Noisy

Characterized by or producing sound, especially a lot of sound that is not pleasant or desired.

Quadratic Functions

Mathematical functions of the form f(x)=ax^2+bx+c, where a, b, and c are constants and a ≠ 0.

Parabolic Graphs

Graphical representations of quadratic functions that display a symmetrical, curved shape similar to an arch.