Question
A 20-year bond has a par value of 1,000 and pays semi-annual coupons at a 6% (annual) rate. An investor purchases the bond at issue
A 20-year bond has a par value of 1,000 and pays semi-annual coupons at a 6% (annual) rate. An investor purchases the bond at issue at a price such that the yield to maturity is 5.5% convertible semi-annually. The investor sells the bond immediately after the 11th coupon payment at a price such that its new owner's yield to maturity is 5% convertible semi-annually. What was the original investor's yield (convertible semi-annually) on this investment over the 5.5-year period the bond was owned? Could you show all the work and not on excel please and thank you.
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