A bond is issued with a coupon rate of 6% (paid out semi-annually), a maturity of 19 years and a yield to maturity of 5%. If you decide to purchase the bond today for $1,121.74 andfor 2 years, what is your overall rate of return on the bond if the yield to maturity at the end of the holding period is 3%?O 29.14%O26.49%O 32.05%O 38.78%O 35.26%<<< Question 29

Price of bond is present value of coupon payment plus present value of par value of the bond.

A bond is issued with a coupon rate of 6% (paid out semi-annually), a maturity of 19 years and a yield to maturity of 5%. If you decide to purchase the bond today for $1 for 2 years, what is your overall rate of return on the bond if the yield to maturity at the end of the holding period is 3%? 29.14% 26.49%

A bond is issued with a coupon rate of 6% (paid out semi-annually), a maturity of 19 years and a yield to maturity of 5%. If you decide to purchase the bond today for $1 for 2 years, what is your overall rate of return on the bond if the yield to maturity at the end of the holding period is 3%? 29.14% 26.49%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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You buy a bond today with market price of $1200, with a coupon rate of 10%, par value of $1000, and maturity of 10 years. If you sell your bond at the end of 5th year at price of $1045 after receiving coupon payment of that year, what is the annual realized returns on your bond investment? Assume coupon payment are on annual basis. 10% 7.13% 5.34% 2.69% 6.04%
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On the issue date, you bought a 15-year maturity, 6.55% semi-annual coupon bond. The bond then sold at YTM of 6.15%. Now, 7 years later, the similar bond sells at YTM of 5.75 %. If you hold the bond now, what is your realized rate of return for the 7-year holding period?
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A two-year amortizing bond has a coupon rate of 4% and pays its coupons semi- annually. Coupon payments are based upon the outstanding face value at the start of the coupon period. It has a face value of £200 and £50 of the face value is amortized every half year. The yield to maturity is 1% per year. What is the price, duration and convexity of the bond?
A bond is issued with a coupon of 5% paid annually, a maturity of 31 years, and a yield to maturity of 8%. What rate of return will be earned by an investor who purchases the bond for $659.51 and holds it for 1 year if the bond's yield to maturity at the end of the year is 9% ? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.) Rate of return %

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