Consider a zero-coupon bond with a face value of $1,000 and 20 years to maturity.The amount that the price of the bond will change if its yield to maturity decreases from 7% to 5% is closest to:
A) $120
B) -$53
C) $53
D) $673

Question

Quizplus · Accepted Answer

A) FV = 1,000
I = 7
PMT = 0
N = 20
Compute PV = 258.42
FV = 1,000
I = 5
PMT = 0
N = 20
Compute PV = 376.89
chg = (376.89 - 258.42) = 118.47

Consider a Zero-Coupon Bond with a Face Value of $1,000