Question: A 1 5 year bond, pays interest semi - annually, has a coupon rate of 7 % , and a yeld to maturity of 6

A 15 year bond, pays interest semi-annually, has a coupon rate of 7%, and a yeld to maturity of 6 F . If interest rates decline by 100 bps , how long will it take before the capital gain is eliminated by the lower reinvestmene interest rate? (choose the closers andwer).
A. about 9.78 years
B. about 7 years
C.about 10 years
D. about 15 years
A 1 5 year bond, pays interest semi - annually,

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

Q:

One year ago, you bought a bond at a price of $992.6000. The bond pays coupons semi- annually, has a coupon rate of 6% per year, a face value of $1,000 and would mature in 5 years. Today, the bond...

Q:

A 15 year bond pays interest semi annually. The bond's price today (T=0) is $84,627.55. The bond has a face value of $100,000. The bonds yield to maturity is 10.0%. What is the the bonds annualized...

Q:

Noelle Inc. issued a $1.3 million bond at 9% for 3 years to finance a project. The bonds were issued on January 1, 2018. The bond pays interest semi annually on July 1 and January 1. The market rate...

Q:

Noelle Inc. issued a $1.2 million bond at 9% for 2 years to finance a project. The bonds were issued on January 1, 2018. The bond pays interest semi annually on July 1 and January 1. The market rate...

Q:

Noelle Inc. issued a $1.2 million bond at 9% for 2 years to finance a project. The bonds were issued on January 1, 2018. The bond pays interest semi annually on July 1 and January 1. The market rate...

Q:

17) Today is February 15, 2011. What is the price at which you can sell your ABC bond if it is quoted at 105% of its $1,000 face value? Noting that ABC bond pays interest semi- annually, has a coupon...

Q:

F igure 2 P r oject Net Cash F l ows f o r Alba Year P r oject A P r oject B 1 -900 950 2 200 950 3 900 950 4 1800 950 5 2500 950 6 2500 950 7 1800 950 8 1200 950 9 800 950 10 200 950 Since David is...

Q:

F igure 2 P r oject Net Cash F l ows f o r Alba Year P r oject A P r oject B 1 -900 950 2 200 950 3 900 950 4 1800 950 5 2500 950 6 2500 950 7 1800 950 8 1200 950 9 800 950 10 200 950 Since David is...

Q:

An investment has the following data: Year Ending balance Cash dividend I 10 5 26 3 4 5 8 20 30 30 20 5 4 (i) Calculate the cash return (8pts) (ii) Calculate Rate of return (8pts) (2) The following...

Q:

Part A,D and E please 12. Calculate the requested measures for bonds A and B (assume each bond pays interest semi- annually): B Coupon Yield to maturity Maturity (in years) Par Price A 8% 8% 2 100.00...

Q:

Building Global Skills List different products you use on a regular basis, such as your alarm clock, camera, car, coffeemaker, computer, smartphone, television, tabletperhaps even your favorite CD,...

Q:

A 4.0 kg mess kit sliding on a frictionless surface explodes into two 2.0kg parts: 3.0 m/s, due north, and 5.0 m/s, 30o north of east. What is the original speed of the mess kit?

Q:

1 . How can an accounting system help you find anomalies or variances in financial data?

Q:

Pharoah Company reported the following amounts for 2022: Raw materials purchased $95,200 Beginning raw materials inventory 5,824 Ending raw materials inventory 5,040 Beginning finished goods...