Question
For the following questions, assume the normal case that coupon payments are semi-annual. a. What is the yield to maturity on a 13-year, 7.4% coupon
For the following questions, assume the normal case that coupon payments are semi-annual.
a. What is the yield to maturity on a 13-year, 7.4% coupon bond if the bond is currently selling for $1,000?
b. For the bond above, suppose that immediately after purchase market rates change to 3.70%.
If you hold the bond for 3 years and then sell it, what is your effective annual return on this investment?
a. The YTM is 7.4%
(enter response rounded to decimal places; i.e., x.xx%)
b. Your effective annual return is
(enter response rounded to decimal places; i.e., x.xx%)
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