Changes in Interest Rate and Bond Pricing A US government bond 20-year bond has a coupon rate of 3% and a face value of $1,000 Assume that the interest rate on similar bonds rises from 3% to 5%. What is the expected change in the bond price due to the increase in the interest rate (in percentage)? You may assume that the bond's price equals its PV and that the interest rate on similar bonds is the appropriate discount rate (make sure you understand why these are reasonable assumptions). See the hint for further instructions. Multiple Choice A 12 4% Increase Decline of 24.9% Decline of 19.5% Decline of 22.4%

Chenges in Interest Rate and Bond Pricing A US governmest bond 20 year bond thas a coupon igle of 37 and a face walue or 51000 See the hint for funther inseuclions A 0 N nowes Dedine ef ns: Ovedine ef 22+4