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:
A)22%
B)24%
C)-22%
D)-24%

Question

Quizplus · Accepted Answer

D)FV = 1000
I = 7
PMT = 80
N = 20
Compute PV = 1105.94
FV = 1000
I = 5
PMT = 80
N = 20
Compute PV = 1373.87
chg = (1105.94 - 1373.87 )= -267.93
%chg = -267.93/1105.94 = -0.2422 or -24%

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