n bond that will pay $1,000 at maturity (its par value). The bond pays interest annually at the end of each year and is priced today to yield 8%. If, one year later, (after the first interest payme day and what will be the new price if you decide to sell in one year?

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
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A 6-year 6% coupon bond that will pay $1,000 at maturity (its par value). The bond pays interest annually at the end of each year and is priced today to yield 8%. If, one year later, (after the first interest payment), the bond is
priced to yield 10%.
What is the price today and what will be the new price if you decide to sell in one year?
What would be your holding period return for the one year?
Transcribed Image Text:A 6-year 6% coupon bond that will pay $1,000 at maturity (its par value). The bond pays interest annually at the end of each year and is priced today to yield 8%. If, one year later, (after the first interest payment), the bond is priced to yield 10%. What is the price today and what will be the new price if you decide to sell in one year? What would be your holding period return for the one year?
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