A $5,000 bond with a coupon rate of 6.5% paid semiannually has two years to maturity and a yield to maturity of 7%. If interest rates rise and the yield to maturity increases to 7.3%, what will happen to the price of the bond? OA. fall by $32.74 OB. fall by $27.29 OC. rise by $27.29 OD. The price of the bond will not change. ***
A $5,000 bond with a coupon rate of 6.5% paid semiannually has two years to maturity and a yield to maturity of 7%. If interest rates rise and the yield to maturity increases to 7.3%, what will happen to the price of the bond? OA. fall by $32.74 OB. fall by $27.29 OC. rise by $27.29 OD. The price of the bond will not change. ***
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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Question
am. 238
![A $5,000 bond with a coupon rate of 6.5% paid semiannually has two years to maturity and a yield to maturity of 7%. If
interest rates rise and the yield to maturity increases to 7.3%, what will happen to the price of the bond?
OA. fall by $32.74
OB. fall by $27.29
OC. rise by $27.29
D. The price of the bond will not change.
***](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbfbcced6-f321-4303-9fe3-52a954982b5c%2Fd529b265-f9f9-4e26-90db-40c233de7a05%2F5s10rug_processed.jpeg&w=3840&q=75)
Transcribed Image Text:A $5,000 bond with a coupon rate of 6.5% paid semiannually has two years to maturity and a yield to maturity of 7%. If
interest rates rise and the yield to maturity increases to 7.3%, what will happen to the price of the bond?
OA. fall by $32.74
OB. fall by $27.29
OC. rise by $27.29
D. The price of the bond will not change.
***
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