QUESTION 29 Requirement 1: Suppose that today you purchase an semiannual coupon bond with a coupon rate of 6.5 percent and the remaining maturity of 15 years. Currently, the market interest rate for bonds like yours, quoted as YTM, is 7.24 percent. What price do you pay for the bond? Bond Price: $ Requirement 2: Three years passes. Then, you sell the bond on the market for $1,102.08. What is the YTM of the bond when you sell it? (A bond's Yield to Maturity is the rate of return an bond holder will earn on a bond if he holds the bond to its maturity). Yield to Maturity: % Requirement 3: In finance, we know that IRR (internal rate of return) is the discount rate that makes the present value of all future cash flows equal to the intial investment cost. We usually use IRR to measure the performance of an investment that produces multiple cash flows during the holding period. Now looking at your two-year investment in the bond, what is the rate of return, quoted like APR, you have earned on your bond investment? Rate of Return: Requirement 4: You want to compare the return on this semiannual coupon bond with the return on the other annual A henne themes the effort am Mhe Click Save and Submit to save and submit. Click Save All Answers to see all answers Save All An 100 150 160 1715 113 370 275 280 125 380 130 39 200 29 30 31 32 33 34 351 360 180 190 440 400 410 4200 43 Requirement 3: In finance, we know that IRR (internal rate of return) is the discount rate that makes the present value of all future cash flows equal to the intial investment cost. We usually use IRR to measure the performance of an Investment that produces multiple cash flows during the holding period. Now looking at your two-year investment in the bond, what is the rate of return, quoted like APR, you have eamed on your bond investment? Rate of Return: % Requirement 4: You want to compare the return on this semiannual coupon bond with the return on the other annual coupon bond. For this purpose, you would use the effective annual return. What is the effective annual return on your two-year bond investment? Effective Annual Rate: % Requirement 5: You relize that the annual inflation rate over the two years of your bond investment is 2.64 percent. What is the real rate of return implied in the effective annual return that you have eamed on your bond investment? As a professional investor, you want to have a real rate of return as accurate as possible in two demical places % Real Rate of Return: QUESTION 30 all answers