Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose you buy a 9.6 percent coupon bond today for $1,090. The bond has 6 years to maturity. a. What rate of return do you

Suppose you buy a 9.6 percent coupon bond today for $1,090. The bond has 6 years to maturity. a. What rate of return do you expect to earn on your investment? (Round your answer to 2 decimal places. Omit the "%" sign in your response.) Rate of return: 7.67%

b-1. 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? (Round your answer to 2 decimal places. Omit the "$" sign in your response.) Price: $997.77

b-2. What is the annual realized yield on your investment? (Negative amounts should be indicated by a minus sign. Round your answer to 2 decimal places. Omit the "%" sign in your response.) Realized return %

I need helping figuring out b-2) What is the annual realized yield on your investment? I have figured out the rest. Please HELP!

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions