In October 2010, you purchased a French government bond for €100 (face value) which pays a 1% coupon (nominal interest rate) every year until 2020. Today, in October 2014, similar bonds are issued at a 2% interest rate. What is the value of your bond today? d) If the value of the above French bond was €100 today (in October 2014), what would be its implicit yield-to-maturity?
In October 2010, you purchased a French government bond for €100 (face value) which pays a 1% coupon (nominal interest rate) every year until 2020. Today, in October 2014, similar bonds are issued at a 2% interest rate. What is the value of your bond today? d) If the value of the above French bond was €100 today (in October 2014), what would be its implicit yield-to-maturity?
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
Problem 22P
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Question
) In October 2010, you purchased a French government bond for €100 (face value) which pays a 1% coupon (nominal interest rate) every year until 2020. Today, in October 2014, similar bonds are issued at a 2% interest rate. What is the value of your bond today?
d) If the value of the above French bond was €100 today (in October 2014), what would be its implicit yield-to-maturity?
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