Question
The bond has a face value of $1000 and is bought at par with a coupon rate of 5%. After one year, the market yield
The bond has a face value of $1000 and is bought at par with a coupon rate of 5%. After one year, the market yield on the bond changes to 9 %.
| Yrs to maturity | Initial curr yield | Initial P(t) | P(t+1) | Capital Gain | Rate of Return |
| 1 | 0.05 | 1000 | 1000.000 | 0.000 | 0.05 |
| 2 | 0.05 | 1000 | |||
| 3 | 0.05 | 1000 | |||
| 5 | 0.05 | 1000 | |||
| 7 | 0.05 | 1000 |
The bond has a face value of $1000 and is bought at par with a coupon rate of 9%. After one year, the market yield on the bond changes to 5%.
| Yrs to maturity | Initial curr yield | Initial P(t) | P(t+1) | Capital | Rate Of Return |
| 1 | 0.09 | 1000 | 1000.000 | ||
| 2 | 0.09 | 1000 | |||
| 3 | 0.09 | 1000 | |||
| 5 | 0.09 | 1000 | |||
| 7 | 0.09 | 1000 |
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For the first bond Yrs to maturity Initial curr yield Initial Pt Pt...
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Corporate Finance
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
13th International Edition
1265533199, 978-1265533199
