Consider a bond that pays annually an 8% coupon with 20 years to maturity. The percentage change in the price of the bond if its yield to maturity increases from 5% to 7% is closest to: A. −22.5%. B. 22.5%. C. −19.5%. D. 24.5%.

Consider a bond that pays annually an 8% coupon with 20 years to maturity. The percentage change in the price of the bond if its yield to maturity increases from 5% to 7% is closest to: A. −22.5%. B. 22.5%. C. −19.5%. D. 24.5%.

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 8MC: Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for...

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Question

Consider a bond that pays annually an 8% coupon with 20 years to maturity. The percentage change in the price of the bond if its yield to maturity increases from 5% to 7% is closest to:

−22.5%.

22.5%.

−19.5%.

24.5%.

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