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A $5000 Bond with a Coupon Rate of 6

Question 94

Multiple Choice

A $5000 bond with a coupon rate of 6.4% paid semi-annually has four years to maturity and a yield to maturity of 6.2%.If interest rates fall and the yield to maturity decreases by 0.8%,what will happen to the price of the bond?


A) fall by $98.64
B) fall by $40.49
C) rise by $84.46
D) rise by $142.78
E) The price of the bond will not change.

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