Question
Cosmos issued a new series of bonds on January 1, 1995. The bonds were sold at par ($1,000), had a 12% coupon, and mature in
Cosmos issued a new series of bonds on January 1, 1995. The bonds were sold at par ($1,000), had a 12% coupon, and mature in 30 years, on December 31, 2024. Coupon payments are made semiannually (on June 30 and December 31).
A) What was the price of the bonds on January 1, 2000, 5 years later, assuming that interest rates had fallen to 10%?
B) Find the current yield on January 1, 2000, given the price as determined in # 1.
C) Find the capital gains yield on January 1, 2000, given the price as determined in # 1.
D) Find the total return on January 1, 2000, given the price as determined in # 1.
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