Question
Bond 2:Issued on November 1st, 2018 with an original time to maturity of 25 years and a par value of $1,000. It has a coupon
Bond 2:Issued on November 1st, 2018 with an original time to maturity of 25 years and a par value of $1,000. It has a coupon rate of 8% and makes semi-annual coupon payments. The price of this bond is 1,112.48 in the market today. This bond is certified as a green bond. Proceeds from this bond are used to reduce the carbon footprint of the company.
Suppose your aunt invested in these three bonds and the two shares you recommended. Suppose today is May 1st, 2022 and she wants to evaluate her investments. You called a broker.
You learned that the YTM of Bond 2 is 6.6%. a. Calculate its price today. b. Determine the current and capital gains yields for your aunt on her investment in this bond. c. Calculate the total return she earned on this bond investment
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