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4) A $1000 bond with 5 years to maturity has a coupon rate of 4.2% paid semi-annually and a yield to maturity of 6.2% (APR

4) A $1000 bond with 5 years to maturity has a coupon rate of 4.2% paid semi-annually and a yield to

maturity of 6.2% (APR with semi-annual compounding). If interest rates fall and the yield to maturity falls to 5.8%, what will happen to the price of the bond?

A) falls by $15.28 B) falls by $16.86 C) rises by $16.27 D) rises by $10.06 E) The price of the bond will not change.

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