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11. Suppose that you pay $11,000 for a newly issued 5-year coupon bond. The bond has a face value of $10,000 and a coupon rate

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11. Suppose that you pay $11,000 for a newly issued 5-year coupon bond. The bond has a face value of $10,000 and a coupon rate of 5%. a. Draw your timeline of cash flows for the case in which you hold the bond to maturity. b. If you held the bond until it matured, would your yield be more than, equal to, or less than 5% ? Explain. c. Suppose that, after holding the bond for two years and collecting the first two coupon payments, you sell it in the secondary market. Draw the timeline of cash flows for the person who buys your bond, in case they buy it at a price of P2 and hold it until it matures. d. If the interest rate at the end of your holding period is 2% per year (and expected to remain at 2% until the bond matures), how much will you be able to sell it for (i.e. - what is P2 )? e. Draw your timeline of cash flows for the two years that you held the bond. What was your (per year) rate of capital gain? f. What was your holding period rate of return over the two years that you held the bond

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