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Disney issued a $10,000 Par, 4% Coupon bond that will mature in 20 years from now. Disney pays the annual interest payment in 2 equal
Disney issued a $10,000 Par, 4% Coupon bond that will mature in 20 years from now. Disney pays the annual interest payment in 2 equal parts, 6 months apart. So, every 6 months the owner gets 1/2 the ANNUAL income. Instead of getting one big check a year you'll get two smaller ones.
If you buy the above bond today when its yielding 3.5% and you sell the bond 5 years from now, when the bond is yielding 4.5% what is your profit or loss in $$s?
All cash flows occur at the end of the period.
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