Question
Suppose you bought an A-rated, 20 year maturity, 8% coupon bond with face value of $1000 and semi annual coupon payments. Suppose that immediately after
Suppose you bought an A-rated, 20 year maturity, 8% coupon bond with face value of $1000 and semi annual coupon payments. Suppose that immediately after you bought the bond the yield on such a bond decreased from 10% to 9% and remains at 9% until you sell the bond at the end of two years. a) what price did you pay for 20 year, 8%coupon bond. b) estimate the coupons you recieved on the bond and interest on interest of the coupons over the two year investment horizon. c) what is the price of the original 20 year bond at the end of your investment horizon? d) what is your total return
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