The price value of a basis point for a 7% coupon, semiannual pay, 10-year bond with a $1,000 par value, currently trading at par, is closest to: A. $1.42. B. $0.71. C. $67.10. D. $33.55.
The price value of a basis point is the price given a 1 basis point change in the discount rate. N = 20; PMT = 35; FV = 1,000; I/Y = 7.01/2 = 3.505; CPT → PV = 999.29 $1,000 – $999.29 = $0.71.
