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Suppose you buy a 10 percent coupon bond today for $1,110. The bond has 8 years to maturity. a. What rate of return do you
Suppose you buy a 10 percent coupon bond today for $1,110. The bond has 8 years to maturity. |
a. | What rate of return do you expect to earn on your investment? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Omit the "%" sign in your response.) |
Rate of return | % |
b. | Two years from now, the YTM on your bond has increased by 2 percent, and you decide to sell. What price will your bond sell for? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.) |
Price | $ |
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