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14. How much would be the loss in price if an investor purchased a 15-year bond...

14. How much would be the loss in price if an investor purchased a 15-year bond with a $1,000 par value, a 6% coupon paid annually and a 7% yield to maturity at the beginning, only to see market interest rates increase to 15% one year later?

-$339.30

-$424.12

-$296.89

-$466.54

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Answer #1
Face value $1,000
Coupon rate 6%
Coupon payment $60
Years to maturity at purchase 15
Yield to maturity at purchase 7%
Purchase price $908.92
Years to maturity one year later 14
Yield to maturity one year later 15%
The price one year later $484.80
Loss -$424.12

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