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A $ 1,000 bond with a coupon rate of 5​% paid semiannually has eight years to...

A $ 1,000 bond with a coupon rate of 5​% paid semiannually has eight years to maturity and a yield to maturity of 8​%. If interest rates rise and the yield to maturity increases to 8.3​%, what will happen to the price of the​ bond?

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Answer #1
n = 16
I = 4%
Cashflows Amount PVF Present value
Ssemi Annual Interest 25 11.6523 291.3075
Principal 1000 0.53391 533.91
Price of bonds 825.2175
n = 16
I = 4.15%
Cashflows Amount PVF Present value
Ssemi Annual Interest 25 11.52441 288.1103
Principal 1000 0.52174 521.74
Price of bonds 809.8503
Price has decreased by $ 15.37 (825.22-809.85)
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