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Did I calculate part 3 correctly? How much would you pay for a perpetual bond that pays an annual coupon of $50 per year and
Did I calculate part 3 correctly?
How much would you pay for a perpetual bond that pays an annual coupon of $50 per year and yields on competing instruments are 10%? You would pay $ 500. (Round your response to the nearest penny.) If competing yields are expected to change to 8%, what is the current yield on this same bond assuming that you paid $500? The current yield is 10 %. (Round your response to the nearest integer.) If you sell this bond in exactly one year, having paid $500, and received exactly one coupon payment, what is your total return if competing yields are 8%? Your total return is 116 %(Round your response to two decimal places.)Step by Step Solution
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