Question
Shady Rack Inc. has a bond outstanding with 8.75 percent coupon, paid semiannually, and 25 years to maturity. The market price of the bond is
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Shady Rack Inc. has a bond outstanding with 8.75 percent coupon, paid semiannually, and 25 years to maturity. The market price of the bond is $1,052.58. Calculate the bonds yield to maturity (YTM). Now, if due to changes in market conditions, the market required YTM suddenly increases by 2% from your calculated YTM, what will be the percent change in the market price of the bond?
A. -14.87%
B. -14.01%
C. -17.76%
D. -16.39%
E. -17.09%
F. -15.66%
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American Public School Finance
Authors: William A. Owings, Leslie S. Kaplan
3rd Edition
113849996X, 978-1138499966
