A $1,000 bond with a coupon rate of 5.1% paid semiannually has ton years to maturity...

Question

Question

Answer 1

Answer #1

rate positively ..

We have to compute the price of the bond using financial calculator for each case

Put in the calculator for each individual case


		Orignial		With change in interet rate
FV		1000		1000
PMT	1000*5.1%/2	25.5		25.5
I	6.9%/2	0.0345	6.1%/2	0.0305
N	10*2	20		20

Compute PV		($871.51)		($925.96)

Price =		$871.51		$925.96

Change in price =		$54.45

Therefore correct answer is option A. Rise by $54.45

Answer 2

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