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.

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.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter8: Analysis Of Risk And Return

Section: Chapter Questions

Problem 10P

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