Question
A Sunfish bond is paying 10 percent interest for 20 years on a semiannual basis. Assume interest rates in the market (yield to maturity) decline
A Sunfish bond is paying 10 percent interest for 20 years on a semiannual basis. Assume interest rates in the market (yield to maturity) decline from 12 percent to 8 percent: (Use a Financial calculator to arrive at the answers. Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. What is the bond price at 12 percent? Bond price $ b. What is the bond price at 8 percent? Bond price $ c. What would be the percentage return on an investment bought when rates were 12 percent and sold when rates are 8 percent? Return on investment %
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