Solution Library

Calculate Change In Bond Price With Change In Market Interest Rates


Consider a six-year maturity, $100,000 face value bond that pays a 5 percent fixed coupon annually.

1. What is the price of the bond if market interest rates are 4 percent?
    a.    $105,816.44.
    b.    $105,287.67.
    c.    $105,242.14.
    d.    $100,000.00.
    e.    $106,290.56.

2. What is the price of the bond if market interest rates are 6 percent?
    a.    $95,082.68.
    b.    $95,769.55.
    c.    $95,023.00.
    d.    $100,000.00.
    e.    $96,557.87.

3. What is the percentage price change for the bond if interest rates decline 50 basis points from the original 5 percent?
    a.    –2.106 percent.
    b.    +2.579 percent.
    c.    +0.000 percent.
    d.    +3.739 percent.
    e.    +2.444 percent.


These short questions belong to Finance and they deal with the calculation of price of a bond with 1 year maturity depending upon the market interest rates.

Total Word Count 78

Download Full Solution


  • HWA

    this is a very good website

  • HWA

    I have 50 questions for the same test your page is showing only 28

  • HWA

    hi can you please help or guide me to answer my assignments. thanks

  • HWA

    hi can anyone help or guide me to my assignments. thanks

  • HWA

  • HWA

    This solution is perfect ...thanks

  • HWA

    Hello Allison,I love the 2nd image that you did! I also, had never heard of SumoPaint, is something that I will have to exolpre a bit! I understand completely the 52 (or so) youtube videos that you probably watched. Sometimes they have what you want, sometimes they don't! However, it is always satisfying when you are able to produce something that you have taught yourself. Great job!Debra 0 likes

  • HWA

    Perfect bank of solution. 

  • HWA

    great !

  • HWA
    Paul Brandon-Fritzius

    thanks for the quick response. the solution looks good. :)

  • HWA
    tina Johnson

    thnx for the answer. it was perfect. just the way i wanted it. 

  • HWA

    works fine.