Question
You tell your broker you want to buy a 20-year government bond. He has one for sale that pays a 5% coupon. The going rate
You tell your broker you want to buy a 20-year government bond. He has one for sale that pays a 5% coupon. The going rate for a typical 20-year Treasury is 7.5%. Assume a Par Value of $100. Shortly after you buy the bond, the YTM on 20-year bonds rose to 9.5%.
How much money did you lose?
a. $14.28
b. $24.92
c. $14.17
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Foundations of Financial Management
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
10th Canadian edition
1259261018, 1259261015, 978-1259024979
