Question
a). Suppose today you buy a 5.6% annual coupon bond for $930 (Face value = $1,000). The bond has 10 years to maturity. What is
a). Suppose today you buy a 5.6% annual coupon bond for $930 (Face value = $1,000). The bond has 10 years to maturity. What is the yield to maturity (YTM)?
b). One year from now, the YTM on your bond has declined by 1%, and you decided to sell. What price will your bond sell for? What is the holding period return on your investments? Compared this return to the YTM when you first bought the bond. Why are they different?
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The Handbook Of Financing Growth
Authors: Kenneth H. Marks, Larry E. Robbins, Gonzalo Fernandez, John P. Funkhouser, D. L. Williams
2nd Edition
