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10. Consider a 10-year coupon bond with 10% annual coupons. The current YTM is 7%. Suppose you buy the bond today and hold the
10. Consider a 10-year coupon bond with 10% annual coupons. The current YTM is 7%. Suppose you buy the bond today and hold the bond till maturity. What is the rate of return from this investment if the YTM increases from 7% to 9% after three years? A. 7% B. 9% C. 9% E. Between 7% and 9% 11. 12. Consider a 10-year coupon bond with 10% annual coupons. The current YTM is 7%. Suppose you buy the bond today and sell it in three years right after receiving the third coupon. What is the rate of return from this investment if the YTM increases from 7% to 9% after three years? A. 7% B. 9% C. 9% E. Between 7% and 9% The Sisyphean Company has a bond outstanding with a face value of $1000 that reaches maturity in 15 years. The bond certificate indicates that the stated coupon rate for this bond is 8% and that the coupon payments are to be made semiannually. Assuming the appropriate YTM on the Sisyphean bond is 9%, then this bond will trade at A. par. B. a discount. C. a premium. D. None of the above
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