Question: Practice Problem 7 Consider a 2-year bond that makes semi-annual coupon payments. The annual coupon rate is 9%, the face value is $1,000 and the

Practice Problem 7 Consider a 2-year bond that makes semi-annual coupon

Practice Problem 7 Consider a 2-year bond that makes semi-annual coupon payments. The annual coupon rate is 9%, the face value is $1,000 and the interest rate is 10% per year. By how many percent will the price drop if the yield on the bond increases to 11%? What will be the price of the bond after such an increase in the yield

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