41) Assume that you purchase a 10-year Rs 1,000 par value bond, with a 12% coupon,...

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41) Assume that you purchase a 10-year Rs 1,000 par value bond, with a 12% coupon, and a yield of 9 Immediately after you purchase the bond, yields fall to 8% and remain at that level to maturity Calculate the realized horizon yield, if you hold the bond for 5 years and then sell. Interest is paid annually. ii) Both bond A and bond B have 6 percent coupons and are priced at par value. Bond A has 5 years to maturity, while bond B has 15 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in price of bond A? (7.5+7.5) 41) Assume that you purchase a 10-year Rs 1,000 par value bond, with a 12% coupon, and a yield of 9 Immediately after you purchase the bond, yields fall to 8% and remain at that level to maturity Calculate the realized horizon yield, if you hold the bond for 5 years and then sell. Interest is paid annually. ii) Both bond A and bond B have 6 percent coupons and are priced at par value. Bond A has 5 years to maturity, while bond B has 15 years to maturity. If interest rates suddenly rise by 2 percent, what is the percentage change in price of bond A? (7.5+7.5)

Answer rating: 100% (QA)

i Initial investment outlay at year 0 Cost of machine ... View the full answer