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If possible the solution should be shown as calculator keystrokes (BA II Plus). Not an excel format You buy a 25-year maturity mortgage-backed bond. The

If possible the solution should be shown as calculator keystrokes (BA II Plus). Not an excel format

You buy a 25-year maturity mortgage-backed bond. The bond has a par value of $10,000 and promises to pay a 6 percent annual coupon. At initial issue, bond market investors require a 12 percent interest rate return on the bond. After five years bond market investors require a 10 percent interest rate return on the bond and you decide to sell. What price did you pay at the outset and what is the price when you sell?

A 20-year maturity mortgage-backed bond is issued. The bond has a par value of $10,000 and a 4.50 percent annual coupon. At initial issue, you pay a price of $7,796 for the bond with the plan to hold it for the full 20 years. What is your annual yield on the bond?

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