A $1000 bond with a coupon rate of 6.2% paid semiannually has eight years to maturity and

Fantastic news! We've Found the answer you've been seeking!

Question:

A $1000 bond with a coupon rate of 6.2% paid semiannually has eight years to maturity and a yield to maturity of 8.3%. If interest rates rise and the yield to maturity increases to 8.6% what will happen to the price of the bond?

A) The price of the bond will rise by $15.78,

B) The price of the bond will fall by $18.93,

C) The price of the bond will fall by $15.78,

D) The price of the bond will not change

Related Book For answer-question

Fundamentals of Investments Valuation and Management

ISBN: 978-0077283292

5th edition

Authors: Bradford D. Jordan, Thomas W. Miller

See More Books

Posted Date: Aug 31, 2018 09:23 AM

See More Questions

A municipal bond with a coupon rate of 4.9 percent sells for $4,750 and has seven years until maturity. What is the yield to maturity of the bond?
A bond with a coupon rate of 8 percent sells at a yield to maturity of 9 percent. If the bond matures in 17 years, what is the Macaulay duration of the bond? What is the modified duration?
A bond with a coupon rate of 7% makes semiannual coupon payments on January 15 and July 15 of each year. The Wall Street Journal reports the asked price for the bond on January 30 at 100:02. What is...
The table below gives the marginal abatement costs of three polluting firms in an industry. The industry is regulated with an emission tax of $9. Emissions. (tons/week) 10 9 8 7 6 5 4 3 2 1 0...
In problems, first find the domain of the given function f and then find where it is increasing and decreasing, and also where it is concave upward and downward. Identify all extreme values and...
Consider again the problem of estimating the mean age, , of all people in the civilian labor force. In Example 8.7 on page 322, we found that a sample size of 2250 is required to have a margin of...
Baxter Manufacturing Ltd has determined total factory overhead costs at both minimum and maximum levels of production 100 000 machine hours and 150 000 machine hours respectively. The total factory...
The Bozeman Inn is trying to determine its break-even point. The inn has 75 rooms that are rented at $50 a night. Operating costs are as follows. Salaries ..........$8,500 per month Utilities...
Assume that after initial recognition, Blossom uses the revaluation model (asset adjustment method) to measure its intangible assets. Prepare the entries required on December 31, 2025, December 31,...
It is false that no A are B. Therefore, some A are B. Use the modified Venn diagram technique to determine if the following immediate inference forms are valid from the Boolean standpoint,...
John Little who is single is a new client of yours that has come to you with several tax issues with which he needs your help. He is an engineer that has his own practice for which he files a...
Local Sweets S . A . has two cash - generating units, Sweet Tooth and Candy Crush. At 3 1 December 2 0 1 7 , the net assets of the two cash - generating units were as follows: Sweet Tooth Candy Crush...
Federalism is defined as shared government between a central government and regional units of government. Essentially, federalism is about the balance of power between the federal government and the...
Consider the following code for two concurrent processes: Flag[0], Flag[1] = False; Process 0 while (true){ } L1: flag[0] = true; while (flag[1]) { Turn=0 process 1 while(true) { if (turn == 0) {...
1. Study the PPC diagram below and answer the questions that follow: Switzerland's PPC (chocolate and watches) Chocolate (millions of bars) 54 3 7 2 68 B X Z O 1 2 3 4 5 6 7 8 9 Watches (thousands)...
Growth of Functions and Relations (01 and O2). [14 Marks] (a) (7 Marks) Arrange the following functions on integers in increasing order of their growth rate. If f(n) is O (g(n)) but g(n) is not O...
Choose foreign country who experienced recent political unrest- previous 10 years. Complete a political risk analysis of the country. What is the current political environment for the country? How...
Consider the activities undertaken by a medical clinic in your area. Required 1. Do you consider a job order cost accounting system appropriate for the clinic? 2. Identify as many factors as possible...
4. In a neuropsychology study of automatic vs. newly acquired motor sequences, ten right-handed and ten left-handed women are scanned in the fMRI (functional magnetic resonance imaging) and measured...
You invest $10,000 in the market at the beginning of the year, and by the end of the year your account is worth $15,000. During the year the market return was 10 percent. Does this mean that the...
Consider a single whole bond sequential CMO. It has two tranches, an A-tranche and a Z-tranche. Explain how the payments are allocated to the two tranches. Which tranche is riskier?
An investment has an expected return of 7 percent per year with a standard deviation of 3.5 percent. Assuming that the returns on this investment are at least roughly normally distributed, how...
Discuss various contexts where you can apply this pattern.
What are some of the anticipated problems that are likely to emerge while designing change pattern.
Define some major and minor research issues of this chapter.

A $1000 bond with a coupon rate of 6.2% paid semiannually has eight years to maturity and

Question:

Expert Answer:

D The price of the bond will not change Explanation P... View the full answer

Fundamentals of Investments Valuation and Management

Students also viewed these finance questions