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Bond Return 1: You bought a $10,000-face 1%-coupon bond that had four years of remaining maturity one year ago. Rates were 5%. You sold the bond today and lost 6% on your entire bond investment. What did you buy the bond for? (Round to the nearest Dollar) Bond Return 2: You bought a $10,000-face 1%-coupon bond that had four years of remaining maturity one year ago. Rates were 5%. You sold the bond today and lost 6% on your entire bond investment. What did you sell the bond for? (Round to the Nearest Dollar) Bond Return 3: You bought a $10,000-face 1%-coupon bond that had four years of remaining maturity one year ago. Rates were 5%. You sold the bond today and lost 6% on your entire bond investment. What is a potential reason you lost 6%? Coupon Bonds became less liquid The issuer was downgraded by a credit ratings agency You bought it thinking the coupon rate was 10% The fed raised interest rates All of the above

Bond Return 1: You bought a $10,000-face 1%-coupon bond that had four years of remaining maturity one year ago. Rates were 5%. You sold the bond today and lost 6% on your entire bond investment. What did you buy the bond for? (Round to the nearest Dollar) Bond Return 2: You bought a $10,000-face 1%-coupon bond that had four years of remaining maturity one year ago. Rates were 5%. You sold the bond today and lost 6% on your entire bond investment. What did you sell the bond for? (Round to the Nearest Dollar) Bond Return 3: You bought a $10,000-face 1%-coupon bond that had four years of remaining maturity one year ago. Rates were 5%. You sold the bond today and lost 6% on your entire bond investment. What is a potential reason you lost 6%? Coupon Bonds became less liquid The issuer was downgraded by a credit ratings agency You bought it thinking the coupon rate was 10% The fed raised interest rates All of the above

Essentials Of Investments
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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Bond Return 1: You bought a $10,000-face 1%-coupon bond that had four years of remaining maturity one year ago. Rates were 5%. You sold the bond today and lost 6% on your entire bond investment. What did you buy the bond for? (Round to the nearest Dollar) Bond Return 2: You bought a $10,000-face 1%-coupon bond that had four years of remaining maturity one year ago. Rates were 5%. You sold the bond today and lost 6% on your entire bond investment. What did you sell the bond for? (Round to the Nearest Dollar) Bond Return 3: You bought a $10,000-face 1%-coupon bond that had four years of remaining maturity one year ago. Rates were 5%. You sold the bond today and lost 6% on your entire bond investment. What is a potential reason you lost 6%? Coupon Bonds became less liquid The issuer was downgraded by a credit ratings agency You bought it thinking the coupon rate was 10% The fed raised interest rates All of the above
Transcribed Image Text:Bond Return 1: You bought a $10,000-face 1%-coupon bond that had four years of remaining maturity one year ago. Rates were 5%. You sold the bond today and lost 6% on your entire bond investment. What did you buy the bond for? (Round to the nearest Dollar) Bond Return 2: You bought a $10,000-face 1%-coupon bond that had four years of remaining maturity one year ago. Rates were 5%. You sold the bond today and lost 6% on your entire bond investment. What did you sell the bond for? (Round to the Nearest Dollar) Bond Return 3: You bought a $10,000-face 1%-coupon bond that had four years of remaining maturity one year ago. Rates were 5%. You sold the bond today and lost 6% on your entire bond investment. What is a potential reason you lost 6%? Coupon Bonds became less liquid The issuer was downgraded by a credit ratings agency You bought it thinking the coupon rate was 10% The fed raised interest rates All of the above
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