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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?

Solutions

Expert Solution

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

Formulae

jeff jeffy answered 2 years ago
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