Table 17‐2 shows that for the 15‐year 10 percent coupon bond, the price would be $1,172.92 if market rates were to decline from 10 percent to 8 percent, resulting in a price appreciation of $172.92 or 17.29 percent. On the other hand, a rise of 2 percentage points in market rates from 10 percent to 12 percent results in a drop in price to $862.35, a price decline of only $137.65 or 13.77 percent.

Table 17‐2

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Table 17-2 Bond Prices at Different Market Yields and Maturities for a 10 Percent Coupon Bond Time to Maturity T 5 252580 10 15 30 6% $1,038.27 1,170.60 1,297.55 1,392.01 1,462.30 1,514.60 1,553.51 8% $1,018.86 1,081.11 1,135.90 1,172.92 1,197.93 1,214.82 1,226.23 10% $1,000 1,000 1,000 1,000 1,000 1,000 1,000 12% $981.67 926.40 885.30 862.35 849.54 842.38 838.39 14% $963.84 859.53 788.12 751.82 733.37 723.99 719.22