Consider a 10-year, 4% annual coupon, option-free bond. Assume a 4% flat yield curve. If there is an upward change in the 5-year par rate, the value of the bond will:

A. Increase
B. Decrease
C. Remain the same

Correct Answer: C

This is an option-free bond trading at par (coupon rate = yield). The only rate that affects the bond's value is the 10-year key rate duration.