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Question
An open-end bond mutual fund is holding a three-year, $1 million face value 5 percent annual coupon bond selling at par. What is the impact on the total asset value of the fund of a 1 percent decrease in interest rates?
A. A decrease of $10,000.
B. An increase of $10,000.
C. A decrease of $26,730.
D. An increase of $27,751.
E. The answer depends upon the number of mutual funds shares outstanding.
Answer
This answer is hidden. It contains 33 characters.
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