A Newly Issued Two-Year Coupon Bond Has a Par Value

Multiple Choice

A newly issued two-year coupon bond has a par value of $100,a coupon rate of 5 percent ($5) and a yield y = 4 percent per year.If the yield goes up by 0.5 percent,then,according to the modified duration formula for a bond's price change,the bond price will:

A) go up by $0.90
B) go up by $1.90
C) go down by $0.96
D) go down by $1.90
E) None of these answers are correct.