Suppose you buy a bond with an annual coupon rate of 6.5%, 12 years to maturity, and a current yield to maturity of 6%. The face value of the bond is $1,000. One minute after you buy the bond yields for that type of bond jump to 7%. What is the percentage change in price? a. 0% b. -3.3% c. -4.6% d. -7.9%
Suppose you buy a bond with an annual coupon rate of 6.5%, 12 years to maturity, and a current yield to maturity of 6%. The face value of the bond is $1,000. One minute after you buy the bond yields for that type of bond jump to 7%. What is the percentage change in price? a. 0% b. -3.3% c. -4.6% d. -7.9%
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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Suppose you buy a bond with an annual coupon rate of 6.5%, 12 years to maturity, and a current yield to maturity of 6%. The face value of the bond is $1,000. One minute after you buy the bond yields for that type of bond jump to 7%. What is the percentage change in price?
a. 0%
b. -3.3%
c. -4.6%
d. -7.9%
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