Question
You are considering the purchase of a 7%, 15-year bond that pays interest annually. If the yield to maturity on the bond is 6%, what
You are considering the purchase of a 7%, 15-year bond that pays interest annually. If the yield to maturity on the bond is 6%, what price will you pay? Round your answer to the nearest cent. Assume the bond face value is $1,000. Assume that you purchased the bond at the price determined above. Now you sell the bond for $1,120. Assume you receive the second year's interest payment on the sale date. What is your rate of return on this investment? You must use a financial calculator to compute this return and round your answer to the nearest tenth of a percent.
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