Question
Suppose you purchase a 30-year, SEK 10,000 par value, zero-coupon bond with a yield to maturity (YTM) of 4.4%. You hold the bond for 5
Suppose you purchase a 30-year, SEK 10,000 par value, zero-coupon bond with a yield to maturity (YTM) of 4.4%. You hold the bond for 5 years before selling it.
(a) What is the price of the bond when you buy it?
The price of the bond iS .....
(b) If the bonds yield to maturity drops by 1 percentage point when you sell it, what is the internal rate of return of your investment?
If YTM drops by one percentage point when you sell the bond, IRR is............ %. (round to one decimal)
(c) If the bonds yield to maturity drops by 2 percentage points when you sell it, what is the internal rate of return of your investment?
If YTM drops by two percentage points when you sell the bond, IRR is............ %. (round to one decimal)
(d) If the bonds yield to maturity increases by 1 percentage point when you sell it, what is the internal rate of return of your investment?
If YTM increases by one percentage point when you sell the bond, IRR is............... %. (round to one decimal)
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