A company issues a ten-year $1,000 face value bond at par with a coupon rate of 6.8% paid semiannually. The YTM at the beginning of the third year of the bond (8 years left to maturity) is 8.5%. What was the percentage change in the price of the bond over the past two years? A. -10.26% B. -12.31% C. -14.36% D. -8.21%
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5% and the remaining 8 years to maturity. PV = (C * (1 - (1 + r)^-n) / r) + (F / (1 + r)^n) Where: C = semiannual coupon payment = $1,000 * 6.8% / 2 = $34 r = semiannual YTM = 8.5% / 2 = 0.0425 n = number of periods = 8 years * 2 = 16 periods F = face value of the Show more…
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