$1,000 Face value 20 bond interest payments $48.13 5 10 15 20 Semiannual periods $996.25 Figure 7.3 A typical cash flow transaction associated with an investment in the corporate bond
$1,000 Face value 20 bond interest payments $48.13 5 10 15 20 Semiannual periods $996.25 Figure 7.3 A typical cash flow transaction associated with an investment in the corporate bond
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
Consider buying a $1,000-denomination corporate bond at the market price of $996.25. The interest will be paid semiannually at an interest rate per payment period of 4.8125%. Twenty interest payments over 10 years are required. We show the resulting cash flow to the investor as shown. Find the return on this bond investment (or yield to maturity).
Transcribed Image Text:$1,000
Face value
20 bond interest payments
$48.13
5
10
15
20
Semiannual periods
$996.25
Figure 7.3 A typical cash flow transaction associated with
an investment in the corporate bond
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