chapter 6 You are an officer of a commercial bank and wish to sell one of the bank's assets-a car loan-to another bank. Using the following equation, compute the price you expect to receive for the loan if the annual interest rate is 6 percent, the car payment is $430 per month, and the loan term is five years. Instructions: Enter your response as a whole number = $ PV Suppose you purchase a 3-year, 5-percent coupon bond at par and hold it for two years. During that time, the interest rate falls to 4 percent. Calculate your annual holding period return. Instructions: Enter your response rounded to two decimal places. Holding period return = % A 10-year zero-coupon bond has a yield of 6 percent. Through a series of unfortunate circumstances, expected inflation rises from 2 percent to 3 percent. The face value of the bond is $100. a. Assuming the nominal yield rises in an amount equal to the rise in expected inflation, compute the change in the price of the bond. Instructions: Enter your responses to the nearest penny (two decimal places). Price (with 2% expected inflation) = $ Price (with 3% expected inflation) = $ by $[ The price has fallen b. Suppose that expected inflation is still 2 percent, but the probability that it will move to 3 percent has risen. Describe the consequences for the price of the bond. inflation risk. Investors willl require compensation for taking on additional risk, so the price will and the yield will rise There is increased fall