Bonds 1 answer below »

A $5000 bond with a coupon rate of 5.4% paid semiannually has five years to maturity and a yield to maturity of 7.5%. If interest rates falls and the yield to maturity decreases by 7.8% , what will happen to the price of the bond?

a) rise by $12.16
b) fall by $9.82
c) fall by $11.59
d) The price of the bond will not change


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