A12-year, 5% coupon bond pays interest annually. what is the change in the price of this bond if the market yield rises to 6% from the current yield of 4.5%?

There will the decrease of 12.38% in the price of bond.

Explanation:

Assume that the face value of bond is $1,000. The 5% coupon payments will product annuity (constant annual payments) of $50 (5% x $1,000)  each year for next 12 years.

= 50 * Present value of annuity (at n= 12, i= 4.5%)

(Refer to table of PVIFA in your text book to find the factor at n=12 and i = 4.5%)

= 50 * 9.11

= $455.5

=

= $586.6

Hence, the value of bond at 4.5% yield is equal to $455.5 + $586.6 = $1,045.1

   2. Now, the yield is 6%. At this rate, value of bond can be computed as follows:

= 50 * Present value of annuity (at n= 12, i= 6%)

(Refer to table of PVIFA in your text book to find the factor at n=12 and i = 6%)

= 50 *  8.384

= $419.2

=

= $496.96

Hence, the value of bond at 6% yield is equal to $419.2 + $496.96 = $916.88

Finally, the percentage between the final value of bond ($916.88) and the initial value of bond ($1,045.1) will be the decrease of 12.38% in price.

the answer is d) it provided irrigation for farming.

odd consecutive integers are odd integers that follow each other. they have a difference of 2 between every two numbers. if n is an odd integer, then n, n+2, n+4 and n+6 will be odd consecutive integers. the first number in the pattern is always the variable on its own or in this case, "n". examples.