What Is the Impact of a 50 Basis Point Increase

Multiple Choice

What is the impact of a 50 basis point increase in interest rates on the net asset value of an open-end bond mutual fund holding a seven year, $100 million face value 7 percent annual coupon bond selling at par? The fund has 10 million shares.

A) An increase of $0.24 per share.
B) A decrease of $0.265 per share.
C) An increase of $0.05 per share.
D) A decrease of $0.05 per share.
E) An increase of $0.265 per share.