Question
Q1. Consider the following par bond (ie coupon rate=yield): Year: 10 and 20 years . Yld 1.50% and 2.0% Q1c. if you hold the 20Y
Q1. Consider the following par bond (ie coupon rate=yield): Year: 10 and 20 years . Yld 1.50% and 2.0%
Q1c. if you hold the 20Y for 1 year, what is your total return from the investment assuming yld curve does not change ?
Hint: your total return comes from coupon collection as well as price appreciation or depreciation
Step by Step Solution
There are 3 Steps involved in it
Step: 1
To calculate the total return from holding the 20year bond for 1 year we need to consider both the c...
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Step: 2
Step: 3
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Fundamentals of Investments Valuation and Management
Authors: Bradford D. Jordan, Thomas W. Miller
5th edition
978-007728329, 9780073382357, 0077283295, 73382353, 978-0077283292
