Which of the statements is correct if market yield increases

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Problem 1: Milner's Tools has a 9-year, 7 percent annual coupon bond outstanding with a $1,000 par value. Carter's Tools has a 10-year, 6 percent annual coupon bond with a $1,000 par value. Both bonds currently have a yield to maturity of 6.5 percent. Which of the statements is correct if the market yield increases to 6.75 percent?

a. Both bonds would decrease in value by 2.50 percent.
b. The Milner's bond will increase in value by $16.82.
c. The Milner's bond will increase in value by 1.63 percent.
d. The Carter's bond will decrease in value by 1.80 percent.
e. The Carter's bond will decrease in value by $16.82.

Reference no: EM132952628

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