Question 7 3 pts Consider a 7% coupon bond with 2 years to maturity and a face v

Question

Question 7 3 pts Consider a 7% coupon bond with 2 years to maturity and a face value of $100. Assume the bond is trading at a yield of 5%, coupons are to be paid semi-annually, and that the next coupon payment is to be made exactly 6 months from today. What is the precise dollar change in price if yield increases to 6%? Round your answer to 2 decimal places. For example if your answer is 5.517, then please write down 5.52 Hint: To calculate the precise dollar change in price, compute the price at the new and old yields respectively. The change in price is defined as new price minus old price.

Explanation / Answer

change in price due to increase in yield = -1.90

old price $103.76 New price $101.86

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