You plan to buy a bond selling at par. Coupon rate is set at 5%. The bond matures in 8 years. You plan to hold the bond until maturity. Suppose interest rates increase five years on. What impact will this increase in market interest rates have on the value of the bond at maturity?

Question options:

1)

No impact

2)	Bond value will decline (THIS OPTION IS WRONG)

3)	Bond value will increase

4)	Bond value will rise by 50 basis points

OPTION 2 IS WRONG