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A $1,000 5-year bond with yearly coupon payments of 4% is sold to yield the buyer a yield to maturity of 6%. a. Calculate the
A $1,000 5-year bond with yearly coupon payments of 4% is sold to yield the buyer a yield to maturity of 6%. a. Calculate the price of this bond. b. Immediately after an investor purchases the bond, the interest rate on the bond decreases to 5.5%. Calculate the realized yield if the investor holds the bond for 2 years (He sells the bond after the 2 years period and reinvest the coupon payments he receives on the bond).
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