Bond price change


Problem:

A bond with 5 years left to maturity pays an interest payment semiannually with a 6% coupon rate and is priced to have a 5% yield to maturity when interest rates surprisingly fall by 1.0%.

Requirement:

Question: How much did the bond's price change? (assume a $1,000 par value)

Note: Explain all steps comprehensively.

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Finance Basics: Bond price change
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