A Bond That Pays Interest Annually Has a 6 Percent

Multiple Choice

A bond that pays interest annually has a 6 percent promised yield and a price of $1,025. Annual interest rates are now projected to fall 50 basis points. The bond's duration is six years. What is the predicted new bond price after the interest rate change? (Watch your rounding.)

A) $1,042.33
B) $995.99
C) $1,054.01
D) $987.44
E) None of the options presented