What Happens to the Price of a 3-Year Bond (With

question 2

Multiple Choice

What happens to the price of a 3-year bond (with par value $1,000) with an 8% coupon when interest rates change from 8 to 6%?

• A) A price increase of $51.54
• B) A price decrease of $51.54
• C) A price increase of $53.47
• D) A price decrease of $53.47