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(Bonds) A bond with a $1,000 par, 6 years to maturity, a coupon rate of 6%,...

(Bonds) A bond with a $1,000 par, 6 years to maturity, a coupon rate of 6%, and annual payments has a yield to maturity of 3.8%. What will be the percentage change in the bond price if the yield changes instantaneously to 5.3%? (If your answer is, e.g., -1.123%, enter it as -1.123. If the sign of the price change is incorrect, no credit will be given.)

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Expert Solution

Par value $                               1,000.00
Coupon rate 6.00%
Coupon payment per period $                                     60.00
YTM 3.80%
Years to maturity                                                  6
Price when YTM is 3.80% $1,116.08
2nd YTM 5.30%
Price when YTM is 5.30% $1,035.19
Change in price -$80.89
Percentage change in price -7.25%

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jeff jeffy answered 2 years ago
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