!!! This is a Two-Part Question !!!

Question 2) Bond prices and yields are inversely related. What is the percentage change in price from the 6% coupon, 10-year bond trading at par when the yield increases to 7%.

a) - 7.1%

b) 1.0%

c) 7.1%

d) - 5.1%

Question 3) An increase in a bond's yield to maturity results in a smaller price change than a decrease in yield of equal magnitude. What is the change in price of the bond, initially trading at par, when its yield to maturity goes down by 1% (i.e. from 6% to 5%)?

A) 7.8%

B) - 7.8%

C) 6.0%

D) 0.7%

12 13 14 15 2. An increase in a bond's yield to maturity results in a smaller price change than a decrease in yield of equal magnitude. 1% lower 1% higher Par $1,000 $1,000 $1,000 Coupon rate 6.0% 6.0% 6.0% years to maturity 10 10 10 yield to maturity 6.0% 5.0% 7.0% $1,000.00 $1,077.95 $928.94 change in price due to 1% yield chan 7.8% -7.1% 16 17 18 Price 19 20