Question
A) Suppose that today you buy a bond that has a 9% annual coupon rate with coupons paid semi-annually. The bond has 10 years to
A) Suppose that today you buy a bond that has a 9% annual coupon rate with coupons paid semi-annually. The bond has 10 years to maturity, par/face value $1000 with a current yield to maturity of 7%. What is the current price of the bond?
B) Three years from now, the YTM on your bond has declined by 2 percent, and you decide to sell. What price will your bond sell for?
c. What is the holding period yield (over the three years) on your investment?
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Management Accounting
Authors: Pauline Weetman
2nd Edition
0273718452, 978-0273718451
