A Bond Is Scheduled to Mature in Five Years

Multiple Choice

A bond is scheduled to mature in five years.Its coupon rate is 9 percent with interest paid annually.This $1,000 par value bond carries a yield to maturity of 10 percent.Calculate the percentage change in this bond's price if interest rates on comparable risk securities decline to 7 percent.Use the duration valuation equation.

A) +8.58 percent
B) +12.76 percent
C) -12.75 percent
D) +11.80 percent
E) +11.52 percent