Question
A bond rated AAA has a current market price of $800, a coupon interest rate of 10%, and a 10-year maturity. Interest is paid SEMIANNUALLY.
A bond rated AAA has a current market price of $800, a coupon interest rate of 10%, and a 10-year maturity. Interest is paid SEMIANNUALLY. If the bond's par value is $1,000, what is its yield to maturity (YTM)?
A. 6.82%
B. 13.74%
C. 14.74%
D. None of the above
Calculate the realized compound yield (RCY) if the coupons can be reinvested at an average annual rate of 7%
A. 11.21%
B. 11.61%
C. 12.54%
D. 13.54%
E. None of the above
Suppose the investor expects to sell the bond 5 years from now for $900. What is the investor's holding period yield?
A. About 7%
B. About 10%
C. 14.3%
D. 15.02%
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