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18. Salim, a risk taker investor, purchased a $1000 bond with a coupon rate of 6% paid semiannually. The bond has 7 years to maturity and a yield to maturity of 9.5%. Assume that the interest rates rise and the yield to maturity decreases by 100 basis points, what will happen to the price of the bond? * A The price of the bond will fall by $46.14. B) The price of the bond will rise by $46.14. C) The price of the bond will rise by $45.2. D) The price of the bond will fall by $45.2. O E) None of the above

18. Salim, a risk taker investor, purchased a $1000 bond with a coupon rate of 6% paid semiannually. The bond has 7 years to maturity and a yield to maturity of 9.5%. Assume that the interest rates rise and the yield to maturity decreases by 100 basis points, what will happen to the price of the bond? * A The price of the bond will fall by $46.14. B) The price of the bond will rise by $46.14. C) The price of the bond will rise by $45.2. D) The price of the bond will fall by $45.2. O E) None of the above

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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18. Salim, a risk taker investor, purchased a $1000 bond with a coupon rate of 6% paid semiannually. The bond has 7 years to maturity and a yield to maturity of 9.5%. Assume that the interest rates rise and the yield to maturity decreases by 100 basis points, what will happen to the price of the bond? * A The price of the bond will fall by $46.14. B) The price of the bond will rise by $46.14. C) The price of the bond will rise by $45.2. O D) The price of the bond will fall by $45.2. O E) None of the above
Transcribed Image Text:18. Salim, a risk taker investor, purchased a $1000 bond with a coupon rate of 6% paid semiannually. The bond has 7 years to maturity and a yield to maturity of 9.5%. Assume that the interest rates rise and the yield to maturity decreases by 100 basis points, what will happen to the price of the bond? * A The price of the bond will fall by $46.14. B) The price of the bond will rise by $46.14. C) The price of the bond will rise by $45.2. O D) The price of the bond will fall by $45.2. O E) None of the above
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