finance

The Corner Grocer has a 7-year, 6 percent annual coupon bond outstanding with a $1,000 par value. The bond has a yield to maturity of 5.5 percent.
Which one of the following statements is correct if the market yield suddenly increases to 6.5 percent?

The bond price will increase by $57.14.

The bond price will increase by 5.29 percent.

The bond price will decrease by $53.62.

The bond price will decrease by 5.43 percent.

The bond price will decrease by 5.06 percent.

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  1. Ravi Industries bond has a 12 percent coupon rate and Rs.1,000 face value.
    Interest is paid on annual basis, and the bond has 10 years to maturity. If
    3
    investors require a 14 percent yield, what is the bond’s value? What is the
    effective annual yield on the bond? (

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