# A $1000, 7% coupon bond has 15 years remaining until maturity. The rate of return required by

## Question:

a. Rises to 8%.

b. Rises to 9%.

c. Falls to 6%.

d. Falls to 5%.

e. Is the price change caused by a 2% interest rate increase twice the price change caused by a 1% interest rate increase?

f. Compare the magnitude of the price change caused by a 1% interest rate increase to the price change caused by a 1% interest rate decrease.

Coupon

A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...

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