Question
(Bond valuation) At the beginning of the year, you bought a $1,000 par value corporate bond with an annual coupon rate of 13 percent
(Bond valuation) At the beginning of the year, you bought a $1,000 par value corporate bond with an annual coupon rate of 13 percent and a maturity date of 18 years. When you bought the bond, it had an expected yield to maturity of 15 percent. Today the bond sells for $1,000. a. What did you pay for the bond? b. If you sold the bond at the end of the year, what would be your one-period return on the investment? Assume that you did not receive any interest payment during the holding period. a. The price you paid for the bond is $ (Round to the nearest cent.) b. If you sold the bond today, your one-period return on the investment is %. (Round to two decimal places.) 133
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Foundations of Finance The Logic and Practice of Financial Management
Authors: Arthur J. Keown, John D. Martin, J. William Petty
8th edition
132994879, 978-0132994873
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