(a) For a 30-year, 6% coupon, semi annual payments, face value $1000, if the yield is 8%, compute the current bond price. (b) Two years later, if the yield of the same bond becomes 9%, compute the new bond price then. (c) If to buy at (a) price and sell at (b) price, compute the realized (horizon) return on this bond investment.

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
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(a) For a 30-year, 6% coupon, semi annual payments, face value $1000, if the yield is 8%, compute the current bond price.

(b) Two years later, if the yield of the same bond becomes 9%, compute the new bond price then.

(c) If to buy at (a) price and sell at (b) price, compute the realized (horizon) return on this bond investment.

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