Question

A 13-year, 6 percent coupon bond pays interest semiannually. The bond has a face value of $1,000. What is the percentage change in the price of this bond if the market yield to maturity rises to 5.7 percent from the current rate of 5.5 percent

Answer 1

Answer:

Possible options:

A) 1.79 percent decrease

B) 1.79 percent increase

C) 1.6 percent decrease

D) 1.97 percent increase

E) 1 percent decrease

Answer is A

Explanation:

N = 13X2=26

I/Y = 5.7/2

PV =-1027.28

PMT = 30

FV = 1000change

I/Y to 5.5/2

10463

change between 1046.0056 to 1027.25

1- F/I (decrease)

or I-F/I

(1046.0056/1027.25) / 1046.0056