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1. What is the value of a 15-year 10% $1,000 coupon bond when the market interest rate is 15%? $421 $708 $1,000 $1,519 _________ 2.

1. What is the value of a 15-year 10% $1,000 coupon bond when the market interest rate is 15%?

  1. $421
  2. $708
  3. $1,000
  4. $1,519

_________

2. What is the value of a 12-year 10% $1,000 bond when the market interest rate is 5%?

  1. $1,000
  2. $1,050
  3. $1,443
  4. $2,200

________

3. What is the value of a 10-year 10% $1,000 bond when the market interest rate is 10%?

  1. $900
  2. $975
  3. $1,000
  4. $1,050

_______

4. For a 10% $1,000 coupon bond, when the market interest rate is greater than 10%, the value of the bond:

  1. Is unaffected and still equals its par value of $1,000.
  2. Is less than its par value of $1,000.
  3. Is greater than its par value of $1,000.
  4. Cannot determine because it depends on the term of the bond in years.

-_________

5. For a 10%, $1,000 coupon bond, a longer term bond (say, 15 years) is:

  1. less affected by changes in the market rate than a 1-year bond.
  2. affected the same by changes in the market rate than a 1-year bond.
  3. more affected by changes in the market rate than a 1-year bond.
  4. Cannot be determined.

__________

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