Consider a 7-year coupon bond with 5% annual coupons and a $1,000 face value. How much will

Question:

Consider a 7-year coupon bond with 5% annual coupons and a $1,000 face value. How much will the price of the bond change if its yield to maturity decreases from 6% to 5%? What is the percentage change in the price?

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...