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A $ 5000 bond with a coupon rate of 5.3​% paid semiannually has two years to...

A $ 5000 bond with a coupon rate of 5.3​% paid semiannually has two 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 = 4
I = 4%
Cashflows Amount PVF Present value
Semi annual interest 132.5 3.6299 480.9618
Principal 5000 0.854804 4274.02
Price of bonds 4754.98
n = 4
I = 4.15%
Cashflows Amount PVF Present value
Semi annual interest 132.5 3.6171 479.2658
Principal 5000 0.84989 4249.45
Price of bonds 4728.716
Decrease in Price by $26.26 (4754.98-4728.72)
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