Consider a bond that pays annually an 8% coupon with 20 years to maturity.The percentage change in the price of the bond if its yield to maturity increases from 5% to 7% is closest to:

Question

Quizplus · Accepted Answer

D) FV = 1,000
I = 7
PMT = 80
N = 20
Compute PV = 1,105.94
FV = 1,000
I = 5
PMT = 80
N = 20
Compute PV = 1,373.87
chg = (1,105.94 - 1,373.87 ) = -267.93
%chg = -267.93/1,373.87 = -.1950 or -19.5%

Consider a Bond That Pays Annually an 8% Coupon with 20