what is the current price

expected price in 1 year

change in price

A 6.50 percent coupon bond with ten years left to maturity is priced to offer a 8.0 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.0 percent. What is the change in price the bond will experience in dollars? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Change in bond price $ Expert answer A Anonymous Here, the bonds are semi-annually compounded and so the rate and coupon payment is divided by 2 and years to maturity is multiplied by 2 A B 1 Coupon rate = 6.50% 2 Years = 10 3 Yield to maturity = 8.00% 4 Par value of bond = $1,000 5 6 Calculate the bond price as follows: 7 8 Bond Price = $898.07 9 10 The yield to maturity will be 7% after one year. Calculate 11 the bond price after one year as follows: 12 Coupon rate = 6.50% 13 Years = 9 14 Yield to maturity = 7.00% 15 Par value of bond $1,000 16 7 Bond price $95703