An 8 Percent Coupon Bond with 15 Years to Maturity

An 8 percent coupon bond with 15 years to maturity is priced to offer a 9 percent yield to maturity. You believe that in one year, the yield to maturity will be 6.5 percent. What is the change in price the bond will experience in dollars? (Assume annual interest payments and par value is $1,000.)

A) $163.92
B) $176.15
C) $198.45
D) $215.82

Correct Answer:

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