Question
2-You are selling a 30-year coupon bond with a par value of $10,000 and a coupon rate of 8% that has 8 years remaining until
2-You are selling a 30-year coupon bond with a par value of $10,000 and a coupon
rate of 8% that has 8 years remaining until it matures. If current interest rates are
7%,
a. Calculate the price of your bond on the secondary market.
b. Calculate your total return. Did you experience a capital gain or loss?
3- Suppose your investment portfolio includes cash, bonds, stocks, and
real estate. Use supply and demand analysis to demonstrate what will happen to the
quantity of bonds, the price of bonds, and interest rates if stock market returns are
increasing?
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