Question
19. An investor purchased a fixed-coupon bond at a time when the bond's yield to maturity was 6.9%. The investor sold the bond prior to
19. An investor purchased a fixed-coupon bond at a time when the bond's yield to maturity was 6.9%. The investor sold the bond prior to maturity and realized a total return of 7.1%. Which of these most likely occurred while the investor owned the bond?
Market interest rates declined. | ||
The inflation rate increased. | ||
Market interest rates increased. | ||
The bond's current yield increased above the bond's coupon rate. |
22. Bernard co. has 8% coupon bonds on the market that have 14 years left to maturity. The bonds will make annual payments. If the YTM on these bonds is 12%, what is the current bond price (in $ dollars)? (Assume the face value of the bond is $1,000) $________.
26. What would be the price of a stock that pays an annual fixed dividend of $1.1 for ten years, and then the dividend payment increases by 1% every year, and the required rate of return is 5% annually?
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