Assume a bond has the following features:
Coupon rate 3% – paid annually
Face Value $1,000
Time to maturity 6 years
YTM = 6.00%
The YTM increases by 30 basis points immediately after you purchase the bond.
What is the “price risk” effect on your investment?
A. A capital loss of $0.00
B. A capital loss of $2.74
C. A capital gain of $11.51
D. A capital gain of $13.23
E. A capital gain of $2.74
F. A capital gain of $0.00
G. A capital loss of $13.23
H. A capital loss of $11.51