Which of the following bonds has the highest interest rate

Asked by admin @ 05/11/2021 in Business viewed by 346 People

If all interest rates in the economy fall by 1%, which of the following bonds would have the greatest percentage increase in value?

a. 20-year, 10% coupon bond.
b. 20-year, 5% coupon bond.
c. 10-year, zero coupon bond.
d. 1-year, 10% coupon bond.
e. 20-year, zero coupon bond.

Answered by admin @ 05/11/2021

Answer: E

Explanation:

The longer the maturity of a bond, the more of an effect a change in interest rates will have on it. The reason for this is that the price change is compounded into the bond price for more longer time frame. Since NPV of all the future cash flows, both the coupon payments and the par value paid at maturity. Therefore, a zero coupon bond is most affected by interest rate changes. Therefore, the longest zero coupon bond is the correct answer, which is option E.

Able, baker, and charles are engaged in the marketing to and enrollment of beneficiaries into medicare health plans. mr. able is an independent agent paid directly by a health plan. ms. baker is an independent agent paid through a field marketing organization (fmo). mr. charles is an independent agent paid for his work by a third-party marketing organization (tmo). how do the cms compensation rules apply to these three agents?

Asked by maham237 @ 13/01/2021 in Business viewed by 2738 persons

Which of the following bonds has the highest interest rate

Similar Questions

Which of the following varies directly with the interest rate

Which of the following has highest bond angle

Which of the following has the highest bond energy

Which of the following will typically offer zero interest rate

Which payment method typically charges the highest interest rates brainly

Which payment method typically charges the highest interest rates

Which of the following molecules has the highest boiling point

If a checking account has an interest rate of 1

Which country has the highest fertility rate in south asia

The federal funds rate is the interest rate charged when

If the interest rate on a savings account is 0.02

Compute the rate of return for the following cash flow

Which of the following is true about conflicts of interest

Which of the following has highest calorific value

The real rate of interest reflects compensation for

Most viewed questions in Business

Foolproof module 9 test answers

Interest rates are expressed as a percentage of

How to enhance knowledge regarding environmental factors through capsim?

Match the job titles with the career clusters.

A company that allows you to license software

Lupe is ready to open a checking account

Mays and mccovey are beer brewing companies

What must be marked on ready to eat bags phfs

Coq six sigma

Henry ford was the first entrepreneur to implement which strategy

Your company was recently served with a lawsuit

Case study starting a business project schedules and curves edgenuity

Which two of the four cs of credit have to do with earning potential and available cash?

The total annual expenditures on advertising in the united states