Bond Features 

Maturity (years) = 
6 
Face Value = 
$1,000 
Starting Interest Rate 
4.86% 
Coupon Rate = 
4% 
Coupon dates (Annual) 
If interest rates change from 4.86% to 5.66% immediately after you buy the bond today (and stay at the new interest rate), what is the price effect in year 4 ?
State your answer to the nearest penny (e.g., 48.45)
If there is a loss, state your answer with a negative sign (e.g., 52.30)
Value of Bond @ 4.86%
Value of Bond =
Where r is the discounting rate of a compounding period i.e. 0.0486
And n is the no of Compounding periods 2 years
Coupon 4%
=
= 983.98
Value of Bond @ 5.66%
Value of Bond =
Where r is the discounting rate of a compounding period i.e. 0.0566
And n is the no of Compounding periods 2 years
Coupon 4%
=
= 969.42
Change = 983.98  969.42= 14.56
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