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A bond has a face value of $1,000, has 5 years until maturity, and an annual coupon rate of 7%? It yields 5% currently.
A bond has a face value of $1,000, has 5 years until maturity, and an annual coupon rate of 7%? It yields 5% currently. a. What is the price of the bond today? b. By how much will the price change over the next year if the yield remains constant? c. What is the rate of return on this bond if you buy it today and sell it after one year while the yield remains constant? d. Calculate the price of a zero-coupon bond with the same characteristics as part a.
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