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Take a Test-Oshayne Whittingham-Google Chrome Secure { https://www.rnatha.com/Student/PlayerTest.aspx?testide 174 196155&centerwinayes; Principles of Business Finance Osnayne Whittingham 12131 Test: Exam 3 This Question: 1 pt 8 of 60 This Test: 60 pt Interest rates have increased by 50 basis points (0 5%) which of the following bonds wi' dede most in price? All of the bonds have AA tangs. O A. A bond that matures in 10 days O B. A bond that matures in 5 years O C. A bond that matures in 10 years D. AI of the bonds wll dedine in price by approximately the same amount o setect your

Explanation / Answer

the option is c ie., A bond that matures in 10 years will have most decline in price

reason : if the interest rate increase by 1 basis point also the bond which is invested for long term will have a greater impact on the price as the interest rate increase the price of the bond decreases. hence the long term bond which matures after 10 years will have most decline in price

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