Multiple Choice
A bond has a duration of 7.5 years.Its current market price is $1,125.Interest rates in the market are 7 percent today.It has been forecasted that interest rates will rise to 9 percent over the next couple of weeks.How will the bond's price change in percentage terms?
A) The bond's price will rise by 2 percent.
B) The bond's price will fall by 2 percent.
C) The bond's price will fall by 14.02 percent.
D) The bond's price will rise by 14.02 percent.
E) The bond's price will not change.
Correct Answer:
Verified
Correct Answer:
Verified
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