Question: A $1000, 7% coupon bond has 15 years remaining until maturity. The rate of return required by the market on these bonds has recently been

A $1000, 7% coupon bond has 15 years remaining until maturity. The rate of return required by the market on these bonds has recently been 7% (compounded semiannually). Calculate the price change if the required return abruptly:
a. Rises to 8%.
b. Rises to 9%.
c. Falls to 6%.
d. Falls to 5%.
e. Is the price change caused by a 2% interest rate increase twice the price change caused by a 1% interest rate increase?
f. Compare the magnitude of the price change caused by a 1% interest rate increase to the price change caused by a 1% interest rate decrease.

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