idering purchasing a coupon bond with a coupon rate of 5 percent and a face value of $10, 000 that matures in 5 years. (a) How much would you be willing to pay for this bond if the market interest rate is 10 percent?(B) Suppose you have just purchased the bond, and the market interest rate suddenly rises to 12 percent. What is the bond worth now? (c) Suppose that one year has elapsed, you have received the first coupon payment, and the market interest rate is still 12 percent. How much would another investor be willing to pay for your bond? If you sell your bond
idering purchasing a coupon bond with a coupon rate of 5 percent and a face value of $10, 000 that matures in 5 years. (a) How much would you be willing to pay for this bond if the market interest rate is 10 percent?(B) Suppose you have just purchased the bond, and the market interest rate suddenly rises to 12 percent. What is the bond worth now? (c) Suppose that one year has elapsed, you have received the first coupon payment, and the market interest rate is still 12 percent. How much would another investor be willing to pay for your bond? If you sell your 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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3. Suppose you are considering purchasing a coupon bond with a coupon rate of 5 percent and a face value of $10, 000 that matures in 5 years. (a) How much would you be willing to pay for this bond if the market interest rate is 10 percent?(B) Suppose you have just purchased the bond, and the market interest rate suddenly rises to 12 percent. What is the bond worth now? (c) Suppose that one year has elapsed, you have received the first coupon payment, and the market interest rate is still 12 percent. How much would another investor be willing to pay for your bond? If you sell your bond at this price, what would be your
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