The sensitivity of bond prices to changes in interest rates


1. Suppose you invest $1,000 today in an account that pays 3% interest, compounded annually. The balance in the account at the end of ten years, if you make no withdrawals, is closest to:

a- $1,000

b- $1,344

c- $1,300

d- $744

2. The sensitivity of bond prices to changes in interest rates is:

a- inflation risk.

b- interest rate risk.

c- credit risk.

d- default risk.

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Financial Management: The sensitivity of bond prices to changes in interest rates
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