Multiple Choice
An FI purchases at par value a $100 000 Treasury Bond paying 10% interest with a 7.5 year duration.If interest rates rise by 4%, calculate the bond's new value.Recall that Treasury Bonds pay interest semi-annually.Use the duration valuation equation.
A) +$28 571.43
B) -$20 864.46
C) +$20 864.46
D) -$28 571.43
Correct Answer:
Verified
Correct Answer:
Verified
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