Question
A 30-year maturity bond has a 8.7% coupon rate, paid annually. It sells today for $877.42. A 20-year maturity bond has 8.2% coupon rate, also
A 30-year maturity bond has a 8.7% coupon rate, paid annually. It sells today for $877.42. A 20-year maturity bond has 8.2% coupon rate, also paid annually. It sells today for $878.1. A bond market analyst forecasts that in 5 years, 25-year maturity bonds will sell at yields to maturity of 9.7% and 15-year maturity bonds will sell at yields of 9.2%. Because the yield curve is upward sloping, the analyst believes that coupons will be invested in short-term securities at a rate of 6.2%. What rate of return does each bond offer over the 5-year period? (Round your answers to 2 decimal places. Omit the "%" sign in your response.) |
Rate of Return | |
30 year bond | % |
20 year bond | % |
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