Question
A 10-year annual zero-coupon bond is newly issued. It has a face value of $1000 and an implied annual interest rate of 8%. James bought
A 10-year annual zero-coupon bond is newly issued. It has a face value of $1000 and an implied annual interest rate of 8%. James bought the 10-year bond on the first day it was issued, and right after he bought it the interest rate on the bond dropped from 8% to 5%.
What is his return on the bond after the interest rate change?
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Fundamentals Of Investments Valuation And Management
Authors: Bradford Jordan, Thomas Miller, Steve Dolvin
9th Edition
1260013979, 9781260013979
