Suppose a bonds price is expected to increase by 5% if its market discount rate decreases by
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Suppose a bond’s price is expected to increase by 5% if its market discount rate decreases by 100 bps. If the bond’s market discount rate increases by 100 bps, the bond price is most likely to change by:
A. 5%.
B. Less than 5%.
C. More than 5%.
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The correct answer is C More than 5 The relationship between bond prices and market discount rates i...View the full answer
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