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A Bond Is Selling for $1000 and It Pays $150

Question 124

Multiple Choice

A bond is selling for $1000 and it pays $150 in interest a year. If the interest rate changes to 20 percent, then


A) the interest payment rises to $200.
B) the interest payment falls to $75.
C) the price of the bond falls to $750.
D) the price of the bond rises to $1500.

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