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How do you compute problem 6 -19 with a finance calculater? Valuing Bonds 187 Bond Returns. A bond has 10years until maturity, carries rate of

How do you compute problem 6 -19 with a finance calculater? image text in transcribed
Valuing Bonds 187 Bond Returns. A bond has 10years until maturity, carries rate of 9%,and sells for $1,100. Interest is paid annually. (L06-2 and LO6-3) if the bond has a yield to maturity of 9% 1 year from now, what will its price be at that time? What will be the rate of return on the bond? Now assume that interest is paid semiannually. What will be the rate of return on the bond? If the inflation rate during the year is 3%, What will be the rate of return on the bond? Bond Returns, you buy an 8% coupon, 20-year maturity bond when its yield to maturity is 9%. (Assume semiannual coupon payments.) Six months later, the yield to maturity is 10%. What is your return over the 6 months? (LO6-3) Interest Rate Risk. Consider three bonds with 8% coupon rates, all making annual coupon payments and all selling at face value. The short-term bond has a maturity of 4 years, the intermediate-term bond has maturity 8 years, and the long-term bond has maturity 30 years.(LO6-3) What will be the price of each bond if their yields increase to 9%? What will be the price of each bond if their yields decrease to 7%? Are long-term bonds more or less affected than short-term bonds by a rise in interest rates? Would you expect long-term bonds to be more or less affected by a fall in interest rates? Rate of Return. A 2-year maturity bond with face value of $1.000 makes annual coupon payments of $80 and is selling at face value. What will be the rate of return on the bond it its yield to maturity at the end of the year is 6%? 8%? 10%? (L06-3) Rate of Return. A bond is issued with a coupon of 4% paid annually. a maturity of 30 years, and a yield to maturity of 7%. What rate of return will be earned by an investor who purchases the bond for $627.73 and holds it for 1 year if the bond's yield to maturity at the endof the year is 8%?(LO6-3)

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