The amount that the price of the bond will change is closest to $30 if its yield to maturity increases from 5% to 7% for a bond with a face value of $100 that pays annually an 8% coupon with 20 years to maturity.
Using, Bond Price = C* (1-(1+r)-n/r ) + F/(1+r)n
where C = Periodic coupon payment,
F = Face / Par value of bond,
r = Yield to maturity (YTM) and
n = No. of periods till maturity
$110 = price of the bond at 7% { 8*(1-(1+7)-20/7 ) + 100/(1+7)20}
$140 = price of the bond at 5% { 8*(1-(1+5)-20/5 ) + 100/(1+5)20}
$140 - $110= $30
The amount that the price of the bond will change is closest to $30.
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