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On December 3 1 st , 2 0 1 3 , you decided to buy a 4 0 - year Government of Canada bond. The
On December st you decided to buy a year Government of Canada bond. The bond had a face value of $ The annual coupon rate on the bond was Coupons were paid semiannually. On December st the yield to maturity on Government of Canada bonds was per year. The term structure of interest rates was flat.
After holding the bond for years you decided to sell the bond on December st Prior to selling the bond you received the December st coupon payment. On December st the yield to maturity on Government of Canada bonds had decreased to per year. The term structure of interest rates was flat.
a How much did you pay for the bond on December st
b How much did you sell the bond for on December st
c What was the effective periodic rate of return that you earned on your investment during the years?
d What was the effective annual rate of return that you earned on your investment during the years?
This must be done on an Excel.
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