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Consider a bond with a par value of 1,000 paying a coupon rate of 10% per year semiannually when the market interest rate is only
Consider a bond with a par value of 1,000 paying a coupon rate of 10% per year semiannually when the market interest rate is only 3% per half year. The bond has 4 years until maturity.
Required: | |
(a) | Find the bond's price today and six months from now after the next coupon is paid. (Round your answers to 2 decimal places. Omit the "$" sign in your response.) |
Current price | $ |
Price after six months | $ |
|
(b) | What is the total rate of return on the bond per six months? (Round your answer to the nearest whole number. Omit the "%" sign in your response.) |
Rate of return | % |
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