Bond a pays $8,000 in 28 years. bond b pays $8,000 in 14 years. (to keep things simple, assume these are zero-coupon bonds, which means the $8,000 is the only payment the bondholder receives.)

suppose the interest rate is 5 percent.

using the rule of 70, the value of bond a is approximately and the value of bond b is approximately

.

now suppose the interest rate increases to 10 percent.

using the rule of 70, the value of bond a is now approximately and the value of bond b is approximately

comparing each bond’s value at 5 percent versus 10 percent, bond a’s value decreases by a percentage than bond b’s value.

the value of a bond (falls/rises) when the interest rate increases, and bonds with a longer time to maturity are (less/more) sensitive to changes in the interest rate.

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whole quiz

1. the sum of all activities involved in getting high-quality products into the marketplace

2.operations

3. the principle of looking at the supply chain as a whole in order to improve the overall flow through the system.

4. produced; performed

5. activities producing tangible products, such as radios, newspapers, buses, and textbooks.

6. activities producing intangible and tangible products, such as entertainment, transportation, and education.

7.   customer focus

8. analyzing a competitor's products to identify desirable improvements

9. the systematic direction and control of the processes that transform resources into finished projects that create value for and provide benefits to consumers.

10. operation management.

your welcome leave a rate and a < 3

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