Question: A $ 1 , 0 0 0 bond with a coupon rate of 6 . 5 % paid semiannually has four years to maturity and

A $1,000 bond with a coupon rate of 6.5% paid semiannually has four years to maturity and a yield to maturity of 6.5%. If interest rates fall and the yield to maturity decreases by 0.8%, what will happen to the price of the bond?
A. The price of the bond will fall by $28.26.
B. The price of the bond will rise by $39.56.
C. The price of the bond will rise by $28.26.
D. The price of the bond will fall by $33.91.
A $ 1 , 0 0 0 bond with a coupon rate of 6 . 5 %

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

Yield to call on a bond with a coupon rate of 6% paid semi-annually, 5 years to maturity, a par value of $1,000 and a selling price of $1,125, callable after 5 years at $1,050 is?

Q:

as a percentage to two decimal places, what is the yield to call on a bond with a coupon rate of 6% paid semi-annually, five years to maturity, a par value of $1,000 and a selling price of $1,125,...

Q:

please answer all 3 Shapes Tuoli A35.000 bond with a coupon rate of 6% paid semiannually has nine years to maturity and a yield to maturity of 6.9% If interest rates fall and the yield to maturity...

Q:

Intro Honda is considering increasing production after unexpected strong demand for its new motorbike. To evaluate the proposal, the company needs to calculate its cost of capital. You've collected...

Q:

can somebody please help me answer this question. thank you so much 5. Consider a municipal bond issued by the state of Massachusetts. It is an 8-year bond with a coupon rate of 6% paid...

Q:

Honda is considering increasing production after unexpected strong demand for its new motorbike. To evaluate the proposal, the company needs to calculate its cost of capital. You've collected the...

Q:

Honda is considering increasing production after unexpected strong demand for its new motorbike. To evaluate the proposal, the company needs to calculate its cost of capital. You've collected the...

Q:

A$1,000 bond with a coupon rate of 6% paid semiannually has eight years to maturity and a yield to maturity of 8.9%. If interest rates rise and the yield to maturity increases to 9.2%, what will...

Q:

A$1,000 bond with a coupon rate of 6% paid semiannually has eight years to maturity and a yield to maturity of 8.9%. If interest rates rise and the yield to maturity increases to 9.2%, what will...

Q:

A fixed coupon bond has a coupon rate of 4% paid semi-annually with a maturity date of 8/15/20. The bond uses a 30/360 day counting convention and is trading at a yield today (12/10/19) of 3%....

Q:

During 2018, Ct Company disposed of three different assets. On January 1, 2018, prior to the disposal of the assets, the accounts reflected the following: Asset Machine Machine A B Machine C...

Q:

a. b. Example 1: Convert 91 cm to in, 2.54 cm= 1 in: 91cm 1cm 36 in 1 2.54 cm Table Fill in the following table using the unit conversion method shown in example 1. Conversion factors Im-100 cm,...

Q:

Complete the sentence. A loan level price adjustment is _ _ _ _ _ _ _ _ _ _ _ Question 6 options: mortgage rate adjustment ( increase ) based on risk factors such as LTV , borrowed credit score, and...

Q:

Can you elucidate the role of molecular chaperones and protein quality control systems in maintaining the integrity and homeostasis of the cytoplasm, particularly under conditions of cellular stress...