$1,000 Face Value, 9% Annual Coupon, 5 Year Maturity, 10

$1,000 face value, 9% annual coupon, 5 year maturity, 10% rate $$\begin{array} { | l | l | l | l | l | } \hline \mathrm { PV } = 962.09 & \mathrm { FV } = 1,000 & \mathrm { I } = 10 & \mathrm {~N} = 5 & \text { PMT } = 90 \\\hline\end{array}$$
-Calculate the percentage change in this bond's price if interest rates on comparable risk securities decline to 7 percent. Use the duration valuation equation.

A) +8.58 percent
B) +12.76 percent
C) -12.75 percent
D) +11.80 percent
E) +11.52 percent

Correct Answer:

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