Question
I only need help with C, please I sent the question 3 times but you do not make the tables. can you do fill in
I only need help with C, please I sent the question 3 times but you do not make the tables. can you do fill in a table with investment, Coupon payment and Selling price not cash flow. So in the table given to us we need to fill in those three. How do I calculate that?
1.8 Bonds
You are considering purchasing the following bond:
Face Value: 1,000,000 SEK
Coupon rate: 5.0 % (coupons are paid once per year)
Time to maturity1: 30 years
The yield to maturity of the bond is 6 %.
a) What is the price of the bond today?
b) For the same bond in item a, assume that we wish to sell
10 years time after the coupon has just been paid and that the yield to maturity has dropped to 5 % by then. What price do we receive when we sell the bond?2
c) Use the table in the answer sheet and indicate the cash flows
received from an investment consisting in buying the bond
30 years before its maturity, keeping it for 10 years and selling it right after coupon number 10 is paid (the investment in year 0, the coupon
payments and the payment received when we sold the bond at the
price computed in item b). Use the values actually paid out those
years, not the present value. Also, indicate by using the sign + or if it was a cash outflow or a cash inflow).
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