Imagine a 25-year annual coupon bond. The bond is selling for $905 today. The bond's coupon rate is 4.2% and the face value is $1,000. If the YTM of this bond decreases 100 basis points (= 1%) tomorrow, what will be the new price? $784.40 $990.71 $1,053,10 $763.53 $1,015.30

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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Imagine a 25-year annual coupon bond. The bond is selling for $905 today. The bond's coupon
rate is 4.2% and the face value is $1,000. If the YTM of this bond decreases 100 basis points (=
1%) tomorrow, what will be the new price?
$784.40
$990.71
$1,053,10
$763.53
$1,015.30
Transcribed Image Text:Imagine a 25-year annual coupon bond. The bond is selling for $905 today. The bond's coupon rate is 4.2% and the face value is $1,000. If the YTM of this bond decreases 100 basis points (= 1%) tomorrow, what will be the new price? $784.40 $990.71 $1,053,10 $763.53 $1,015.30
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