Please answer the question below: a) What is the Rate of Return (ROR) on a bond purchased for £1000, with a coupon rate of 7% that was sold one year later for £700. b) What is the Yield to Maturity (YTM) for a 15-year zero-coupon bond with a maturity value of £1000 selling for £350?

Please answer the question below: a) What is the Rate of Return (ROR) on a bond purchased for £1000, with a coupon rate of 7% that was sold one year later for £700. b) What is the Yield to Maturity (YTM) for a 15-year zero-coupon bond with a maturity value of £1000 selling for £350?

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 8MC: Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for...

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Question

Please answer the question below:

a) What is the Rate of Return (ROR) on a bond purchased for £1000, with a coupon rate of 7% that was sold one year later for £700.

b) What is the Yield to Maturity (YTM) for a 15-year zero-coupon bond with a maturity value of £1000 selling for £350?

c) What is the Macaulay duration (years) of 9% coupon bond making annual coupon payments if it has 3 years until maturity and has a YTM of 9%?

Definition Definition Percentage gain or loss from a specific investment over time. The rate of return is the difference between the closing and initial values of an investment divided by the initial value of the investment. The closing value includes any intermediate cash flows such as dividends or interest amounts.

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