Assume you purchase (at par) one 11-year bond with a 6.95 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4.95 percent. If you sell the bond after 6 years when the yield to maturity is 7.95 percent, what is your Face Value?

Assume you purchase (at par) one 11-year bond with a 6.95 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4.95 percent. If you sell the bond after 6 years when the yield to maturity is 7.95 percent, what is your Face Value?

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter29: Interest, Rent, And Profit

Section: Chapter Questions

Problem 1WNG

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Assume you purchase (at par) ﻿one 11-year bond with a 6.95 ﻿percent coupon and a $1,000 ﻿face value. Suppose you are only able to reinvest the coupons at a rate of 4.95 ﻿percent. If you sell the bond after 6 ﻿years when the yield to maturity is 7.95 ﻿percent, what is your Face Value?

Assume you purchase (at par) one 11-year bond with a 6.95 percent coupon and a $1,000 face value. Suppose you are only able to reinvest the coupons at a rate of 4.95 percent. If you sell the bond after 6 years when the yield to maturity is 7.95 percent, what is your Face Value?