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Value offour-year fixed-income security

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Reference no: EM132499377

What happens to the value of a four-year fixed-income security promising $ 100 per year if the market interest rate rises from 5% to 6% per year?

(a) A rise of 1% causes a drop of $ 4.87 in market value.

(b) A rise of 1% causes a rise of $ 4.87 in market value.

(c) A rise of 1% causes a drop of $ 8.09 in market value.

(c) A rise of 1% causes a rise of $ 8.09 in market value.

Reference no: EM132499377

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