Problem:
A 5.5 percent coupon bond with 18 years left to maturity is priced to offer a 6.25 percent yield to maturity. You believe that in one year, the yield to maturity will be 5.75 percent.
Requirement:
Question: What is the change in price the bond will experience in dollars assuming face value is $1000 and it pays semi-annual coupons?
- $25.00
- $26.89
- $53.47
- $80.37
Note: Please provide reasons to support your answer.