Question
ABC bond has a yield to maturity of 5.5 percent, and 7 years to maturity. The bond has a 6.5 percent coupon, paid semiannually. Its
ABC bond has a yield to maturity of 5.5 percent, and 7 years to maturity. The bond has a 6.5 percent coupon, paid semiannually. Its par value is $1,000. Suppose that the market yield suddenly increases to 7.25 percent. By what percent will the bond price change?
| a. The bond price will decrease by 9.27 percent | ||
| b. The bond price will increase by 7.04 percent | ||
| c. The bond price will decrease by 8.64 percent | ||
| d. The bond price will increase by 7.16 percent | ||
| e. The bond price will increase by 3.86 percent |
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Principles Of Econometrics
Authors: R Carter Hill, William E Griffiths, Guay C Lim
5th Edition
1118452275, 9781118452271
