Javin Central has a 6-year, 8% annual coupon bond with a $1,000 par value. Nasty Enterprises has a 12-year, 8% annual coupon bond with a $1,000 par value. Both bonds currently have a yield to maturity of 6%. Which of the following statements are correct if the market yield increases to 7% next year?
Question 10 options:
a)
The Nasty bond will increase in value by 7.9%.
b)
One of the bonds will decrease in value by 7.6%.
c)
The Nasty bond will increase in value by $88.25.
d)
The Javin bond will decrease in value by $50.68.
e)
The Javin bond will decrease in value by 5.2%.