Question
A. A bond has a par value of $1,000, a time to maturity of 20 years, and a coupon rate of 7.50% with interest paid
A. A bond has a par value of $1,000, a time to maturity of 20 years, and a coupon rate of 7.50% with interest paid annually. If the current market price is $750, what will be the approximate capital gain of this bond over the next year if its yield to maturity remains unchanged? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
B. Suppose that todays date is April 15. A bond with a 8% coupon paid semiannually every January 15 and July 15 is listed in The Wall Street Journal as selling at an ask price of 1,020.000. If you buy the bond from a dealer today, what price will you pay for it? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Consider a bond paying a coupon rate of 10.50% per year semiannually when the market interest rate is only 4.2% per half-year. The bond has two years until maturity.
Find the bond's price today and six months from now after the next coupon is paid. Bonus: What is the total rate of return on the bond? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
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