Consider a bond with a par value of $1,000, a 5% coupon rate paid semiannually, and 5 years to maturity. Assuming a 6% required rate of return, use a financial calculator to determine the present value of the bond.

A) $957.35

B) $959.00

C) $1,000.00

D) $1,091.59

16. If a bond has a modified duration of 7 and interest rates increase by 50 basis points, what would be the percentage change in the price of the bond?

%Pb

=

-DURm

x

y

A) +3.5%

B) -3.5%

C) +7.0%

D) -7.0%