A 75% Coupon Bond with 9 Years Left to Maturity Is

A 7.5% coupon bond with 9 years left to maturity is priced to offer a 10.4% yield to maturity. You believe that in one year, the yield to maturity will be 8%. What is the change in price the bond will experience in dollars? (Assume interest payments are semiannual and par value is $1,000.)

A) $97.75
B) $101.50
C) $129.25
D) $137.75

Correct Answer:

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