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You purchased the Bond with 10% coupon paying annually, the face value is $1000, and its maturity is 10years. Initially the market interest was 10%
You purchased the Bond with 10% coupon paying annually, the face value is $1000, and its maturity is 10years. Initially the market interest was 10% when you purchased the bond, and the interest rate went up to 20% over the year. Calculate the followings: a. What is initial bond purchasing price? b. What is bond current yield? c. If the market interest rate went up to 20% from 10% at the end if first year, and you want to sell bons at the end of first year. What should be the selling price? You just hold the bond for one year and you want to calculate the rate of return of your bond investment. What is the rate of return? Please show work
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