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Assume an investor buys an 8 percent, semi-annual, 10-year bond at par. He sells it two years later after market interest rates have decreased to
Assume an investor buys an 8 percent, semi-annual, 10-year bond at par. He sells it two years later after market interest rates have decreased to 6 percent. The investors capital gain is closest to:
| ||
$124. | ||
$126. | ||
Based on which of the following term structure theories are forward rates most useful?
Expectations theory | ||
Market segmentation theory |
Relative to a decrease in interest rates, an increase in interest rates of the same size will produce:
a larger percentage change in a bonds price. | ||
a smaller percentage change in a bonds price. | ||
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