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I'm struggling with the following practice problem. How do I solve it? Six months ago, you purchased a $100,000, 4% coupon bond with 9 years
I'm struggling with the following practice problem. How do I solve it?
Six months ago, you purchased a $100,000, 4% coupon bond with 9 years to maturity. The bond make semi-annual coupon payments, and at the time of purchase, had a yield-to-maturity of 3% annual rate, compounded semiannually.
- Calculate price (per hundred dollars of face value) you paid for the bond
- Today, after noticing the yield hs dropped to 2.60%, you sell the bond. What is the current price (per hundred dollars of face value)?
- Calculate your holding period yield from the purchase and subsequent sale fo the bond.
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