Question
Problem 10-8 Interest rate effect [LO3] Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates
Problem 10-8 Interest rate effect [LO3] Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decline from 20 percent to 13 percent. a. What is the bond price at 20 percent? Bond price $ b. What is the bond price at 13 percent? Bond price $ c. What would be your percentage return on investment if you bought when rates were 20 percent and sold when rates were 13 percent? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places. Enter the value as a positive amount.) Return on investment % References WorksheetProblem 10-8 Interest rate effect [LO3]
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