Question
Suppose you have just bought a 10-year, 6% semiannual coupon bond with $1,000 par value. Your purchasing price of the bond implies that the current
Suppose you have just bought a 10-year, 6% semiannual coupon bond with $1,000 par value. Your purchasing price of the bond implies that the current YTM is 7%.
Select all that are true.
Question 7 options:
A) | You would earn 6% rate of return if you hold this bond until the maturity. |
B) | The coupon rate will gradually increase till it becomes the same as the YTM. |
C) | Your purchasing price would have been lower than the par value. |
D) | You will receive a $30 coupon payment every six month. |
E) | The cash flows associated with the bond are an ordinary annuity for the 10 year period with a $1,000 lump sum at the maturity. |
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