Multiple Choice
A $5000 bond with a coupon rate of 6.4% paid semiannually 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 $142.78
D) rise by $84.46
Correct Answer:
Verified
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