Final answer:
As the yield to maturity on a bond increases due to rising interest rates, the bond's price will decrease. For a bond with a 6.3% semi-annual coupon rate and five years to maturity, an increase in YTM from 8.3% to 8.6% will cause the bond price to fall, aligning with options B or C.
Step-by-step explanation:
When the yield to maturity (YTM) on a bond increases due to a rise in interest rates, the price of the bond will decrease. This is because newer bonds are being issued at higher rates, making the older lower-rate bonds less attractive unless sold at a discount to match the effective yield of the newer issues. The given bond has a coupon rate of 6.3%, paid semi-annually, with five years to maturity. Initially, it has a YTM of 8.3%. If the YTM increases to 8.6%, the bond price will decrease. Therefore, if interest rates rise and the YTM increases from 8.3% to 8.6%, the price of the bond will fall. This means option B or C is likely correct, and depending on the magnitude of the interest rate change and the duration of the bond, the specific amount can only be determined through a bond pricing model or financial calculator.