A 7 percent $1,000 bond matures in 6 years, pays interest semiannually, and has a yield...

A 7 percent $1,000 bond matures in 6 years, pays interest semiannually, and has a yield to maturity of 6.93 percent. What is the current market price of the bond?

If the yield to maturity increased by 0.25%, what would happen to the price of the bond?

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Expert Solution

The Price of the bond would decrease as YTM increases as it is inversely proportional to YTM.

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jeff jeffy answered 2 years ago

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