Question
An investor has just bought a semi-annual (181 days) bond with a face value of $5000, a coupon rate of 8%, maturing in 5
An investor has just bought a semi-annual (181 days) bond with a face value of $5000, a coupon rate of 8%, maturing in 5 years, and the next coupon is to be received in 100 days. The market rate is 6% a. Price of the bond? I already calculated this part and the answer is $5426,5 b. 80 days after the purchase of the bonds, the market interest rate is 7%. Calculate the yield from investing in this bond if the bond is sold on this date? c. Assume that the investor wants to sell the bond immediately after receiving the 4th coupon. Calculate the yield d. To immune this bond portfolio from interest rate risk, which date should this bond be sold on?
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College Mathematics For Business Economics, Life Sciences, And Social Sciences
Authors: Raymond Barnett, Michael Ziegler, Karl Byleen, Christopher Stocker
14th Edition
0134674146, 978-0134674148
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