Question
1) a)Calculate the rate of return under the following scenario:You purchase a coupon bond with a coupon rate = 5.5% and a face value of
1)
a)Calculate the rate of return under the following scenario:You purchase a coupon bond with a coupon rate = 5.5% and a face value of $1,000 for $1,100. You hold the bond for one year, receive 1 coupon payment and sell the bond for $ 1,050.What is your rate of return? (please show all work)
b)Name 4 reasons, two from the demand side and two from the supply side that could cause bond prices to fall like they did in part a.
2)Calculate the price of a 5 year coupon bond with a face value of $1000, a coupon rate = 4% and a yield to maturity of 3%. Please show all work.
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