A $5,000 bond with a coupon rate of 7% paid semiannually has two years to maturity and a yield to maturity of 7.5%. If interest rates rise and the yield to maturity increases to 7.8%, what will happen to the price of the bond? A. fall by $27.13 B. rise by $27.13 C. fall by $32.55 D. 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
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A $5,000 bond with a coupon rate of 7% paid semiannually has two years to maturity and a yield to maturity of 7.5%. If
interest rates rise and the yield to maturity increases to 7.8%, what will happen to the price of the bond?
A. fall by $27.13
B. rise by $27.13
C. fall by $32.55
D. The price of the bond will not change.
Transcribed Image Text:A $5,000 bond with a coupon rate of 7% paid semiannually has two years to maturity and a yield to maturity of 7.5%. If interest rates rise and the yield to maturity increases to 7.8%, what will happen to the price of the bond? A. fall by $27.13 B. rise by $27.13 C. fall by $32.55 D. The price of the bond will not change.
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