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A Bond with No Expiration Has an Original Price of $10,000

Question 136

Multiple Choice

A bond with no expiration has an original price of $10,000 and a fixed annual interest payment of $1000.If the price of this bond decreases by $2000, the interest rate in effect will:


A) decrease by 1.5 percentage points.
B) decrease by 2.5 percentage points.
C) increase by 1.5 percentage points.
D) increase by 2.5 percentage points.

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