Semi-annual coupon bond outstanding

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The Corner Grocer has a 7-year, 6 percent semi-annual coupon bond outstanding with a $1,000 par value. The bond has a yield to maturity of 5.5 percent. Show mathematically what happens if the market yield suddenly increases to 7 percent. Elaborate in two to three sentences on the relationship highlighted through this example.

Reference no: EM13917576

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