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Considera10-year,risk-freebondwithacouponrateof5%(annualcoupons)andafaceamount of$1,000. a.What istheYTMon thebondifitspriceis$1,100? b.What istheannualHPRifyoubuythebondfor$1,100,holdthebondfor5years,sellit (immediatelyafterthepaymentofthetime5coupon)atapricecorrespondingtoaYTM of4%,andreinvesttheintermediatecoupons(overthefirst5years)untiltime5atarate of3%?

Considera10-year,risk-freebondwithacouponrateof5%(annualcoupons)andafaceamount of$1,000. a.What istheYTMon thebondifitspriceis$1,100? b.What istheannualHPRifyoubuythebondfor$1,100,holdthebondfor5years,sellit (immediatelyafterthepaymentofthetime5coupon)atapricecorrespondingtoaYTM of4%,andreinvesttheintermediatecoupons(overthefirst5years)untiltime5atarate of3%?

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