Which of the following bonds has the highest interest rate

Asked by admin @ 05/11/2021 in Business viewed by 351 People

If all interest rates in the economy fall by 1%, which of the following bonds would have the greatest percentage increase in value?

a. 20-year, 10% coupon bond.
b. 20-year, 5% coupon bond.
c. 10-year, zero coupon bond.
d. 1-year, 10% coupon bond.
e. 20-year, zero coupon bond.

Answered by admin @ 05/11/2021

Answer: E

Explanation:

The longer the maturity of a bond, the more of an effect a change in interest rates will have on it. The reason for this is that the price change is compounded into the bond price for more longer time frame. Since NPV of all the future cash flows, both the coupon payments and the par value paid at maturity. Therefore, a zero coupon bond is most affected by interest rate changes. Therefore, the longest zero coupon bond is the correct answer, which is option E.

Able, baker, and charles are engaged in the marketing to and enrollment of beneficiaries into medicare health plans. mr. able is an independent agent paid directly by a health plan. ms. baker is an independent agent paid through a field marketing organization (fmo). mr. charles is an independent agent paid for his work by a third-party marketing organization (tmo). how do the cms compensation rules apply to these three agents?

Asked by maham237 @ 13/01/2021 in Business viewed by 2747 persons

Which of the following bonds has the highest interest rate

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