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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
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 25 percent to 20 percent. a. What is the bond price at 25 percent? Bond price $ 406.92 b. What is the bond price at 20 percent? Bond price c. What would be your percentage return on investment if you bought when rates were 25 percent and sold when rates were 20 percent? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Return on investment % Table 10-1 Bond price table (10% Interest Payment, 20 Years to Maturity) Yield to Maturity PV of PV of Coupons Principal Bond Price 29 $1,635.14 $672.97 $2,308.11 4% 1,359.03 456.39 1,815.42 6% 1,146.99 311.80 1,458.80 7% 1,059.40 258.42 1,317.82 896 981.81 214.55 1,196.36 996 912.85 178.43 1,091.29 10% 851.36 148.64 1,000.00 11% 796.33 124.03 920.37 12% 746.94 103.67 850.61 13% 702.48 14% 662.31 16% 592.88 20% 486.96 25% 395,39 +++++ 86.78 789.26 72.76 735.07 51.39 644.27 26.08 513.04 11.53 406.92
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