Answer the question on the basis of the following information for a bond having no expiration
date: bond price = $1,000; bond fixed annual interest payment = $100; bond annual interest
rate = 10 percent.
date: bond price = $1,000; bond fixed annual interest payment = $100; bond annual interest
rate = 10 percent.
A. rise by 2.5 percentage points.
B. rise by 5 percentage points.
C. fall by 2.5 percentage points.
D. fall by 5 percentage points.
ANSWER
A. rise by 2.5 percentage points.