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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Question
Bonds of TLM Corporation with a par value of R1000 sell for R960, mature in five years, and have a 7% annual coupon rate paid semi-annually.
Calcavecchia the current yield and the yield to maturity.
Assume a 10-year, R1,000 par
What would be the value of the Bond described in part b if, just after it had been issued, the expected inflation rate rose by 3 percentage points? Would we now hae6a discount or a premium bond?
What would happen to the bond's value of inflation fell, by 3%? Would we now have a premium or a discount bond?
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