A

$ 1000

bond with a coupon rate of

6.9

%

paid semiannually has

five

years to maturity and a yield to maturity of

7.7

%.

If interest rates rise and the yield to maturity increases to

8

%,

what will happen to the price of the bond?

A.

rise by $ 11.92

B.

fall by $ 14.31

C.

fall by $ 11.92

D.

The price of the bond will not change.