1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
tester [92]
3 years ago
15

Suppose you buy a 7 percent coupon, 20-year bond today when it’s first issued. If interest rates suddenly rise to 15 percent, wh

at happens to the value of your bond?
Business
1 answer:
Mariana [72]3 years ago
5 0

Answer: The value of the bond will decrease

Explanation:

The Interest rate has a negative inverse relationship with the value of a bond . When the interest rate increases the value of a bond decreases and when interest rate decreases  the bond value increases. Bonds with low coupon rates tend to be more sensitive to interest rate changes this is known has coupon effect.

Bonds with long time frame (long term bonds), they also  tend to be are more sensitive to changes in the interest rate this is known has the maturity effect.  Therefore a change in the interest rate will cause a huge change in the value of a Bond with low coupon rate and long time period.

The Bond is a 20 year Bonds which qualifies it to be a long term bond and the coupon Rate is 7%, with these facts and knowing that  long term bonds are more sensitive to interest rate changes we can conclude that the sudden increase of the interest rate to 15%  will cause a huge decrease in the value of the bond

You might be interested in
Which of the following was not a significant factor in the expansion of the French Film industry in the middle 1900s
egoroff_w [7]

Answer:

B) The popularity of imported American films

Explanation:

The expansion of the French Film industry in the middle of 1900s was caused by various factors, some of which are the following:

1. The development and growth of the largest motion picture firms

2. Film industry market was driven towards the wealthy audiences

3. There is more time for leisure for French citizens

Hence, in this case, the correct answer is option B, The popularity of imported American films, which is not a significant factor for the expansion of the French Film industry in the middle 1900s

5 0
3 years ago
What capability of supergroup would be considered costly to imitate?
In-s [12.5K]

The Superdry Brand is capability of supergroup would be considered costly to imitate.

What is Superdry brand known for?

  • The Superdry brand is owned by Superdry plc, a UK-based clothing manufacturer.
  • Superdry items merge Japanese-inspired graphics with vintage American styling. On the London Stock Exchange, it is traded.

What is Superdry brand personality?

  • The Superdry brand is dedicated to unrelenting innovation and is completely fixated on design, quality, and fit.
  • The company creates footwear, accessories, and clothing that is both affordable and of the highest quality.
  • Superdry's distinctive mission is to make our customers feel fantastic while they wear our clothing.

Learn more about Superdry brand

brainly.com/question/17273442

#SPJ4

7 0
1 year ago
Wanda is organizing an Employee Appreciation Day event and is soliciting vendors to provide food and drinks. There are 638 emplo
DedPeter [7]

In this case, Wanda can calculate the revenue for her Employee Appreciation Day event by using this formula:

  • revenue = [(number of employees of the company) + (½ x number of employee of the company)] x event price
  • x = [(638) + (319)] x 2
  • x = 952 x 2
  • x = $1,914

Thus, Wanda’s expected revenue is $1,914, assuming that half of the employees are married and will be attending the Employee Appreciation Day alongside their spouse.  


6 0
3 years ago
For a business to continue, money must be available to finance future growth. <br> t or f
skelet666 [1.2K]
This is true!
Hope this helps. :)
3 0
3 years ago
Read 2 more answers
if the natural rate of unemployment is 5%, what is the total rate of unemployment if output is 2% below potencial output?
valkas [14]
It is 5% for rate Unemployment
4 0
2 years ago
Other questions:
  • Krisp Bite, a breakfast cereal manufacturer, has a storage facility to store sugar, corn, wheat, oats, rice, and barley before t
    8·1 answer
  • Jerod has saved plenty of money and has a lucrative business that he enjoys. he likes to volunteer his time in the community and
    7·1 answer
  • Consider the market for white athletic socks, which consumers consider to be identical products. If the demand is very elastic a
    12·1 answer
  • __________ is the degree to which a supplier relies on a purchaser because of the importance of that purchaser to the supplier a
    8·2 answers
  • Question 10 (5 points)
    13·1 answer
  • Question in pic above thx
    5·1 answer
  • Swifty Company manufactures and sells three products. Relevant per unit data concerning each product are given below. Product A
    8·1 answer
  • The proposition that increases in the government budget deficit has no effect on aggregate demand is called the
    13·1 answer
  • 3.
    11·1 answer
  • ________ means selling goods and services to ultimate consumers over the internet.
    7·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!