QUESTIONS 97 THROUGH 108 RELATE TO FIXED INCOME INVESTMENTS.

108. The bonds issued by ALS Corp. are currently priced at 108.00 and are option free. Based on a

portfolio manager’s valuation model, a 10 basis points rise in interest rates will result in the bond

price falling to 106.50 while a 10 basis points fall in interest rates will result in the bond price rising

to 110.00. The market value of the portfolio manager’s holdings of ALS bonds is $2 million. The

expected change in the market value of this holding for a 100 basis point change in interest rates

will be closest to:

A.

$124,000.

B.

$322,600.

C.

$645,200.