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Exactly 26 years ago you purchased a newly-issued 30-year bond, annual 6.0% coupon, par $1000, when market rates were 5.0%. Exactly 10 years ago,
Exactly 26 years ago you purchased a newly-issued 30-year bond, annual 6.0% coupon, par $1000, when market rates were 5.0%. Exactly 10 years ago, rates suddenly increased to 11.0%. Today, the central bank announced a rate change, which has caused rates to dramatically decrease to 3%, so you sell. What is your realized yield over your holding period of the bond? There are 4 steps. Enter your answers for each below: A B I 1. What is the price at purchase?: 2. What is the price when you sold the bond?: e 3. Total accumulated value when you sold the bond (including the sale of the bond) is: 4. Realized annual rate of return is:
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There are 3 Steps involved in it
Step: 1
1 To calculate the realized yield over the holding period of the bond we need to go through the following steps Step A Determine the price at purchase ...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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