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A savvy investor paid $6,500 for a 20-year $10,000 mortgage bond that had a bond interest rate of 12% per year, payable quarterly. Three years after he purchased the bond, market interest rates went down, so the bond increased in value. If the investor sold the bond for $11,500 three years after he bought it, what
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- A savvy investor paid $5,000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 2% per year, payable quarterly. Three years after he purchased the bond, market interest rates went down, so the bond increased in value. If the investor sold the bond for $11,000 three years after he bought it, what rate of return did the investor make per quarter and per year (nominal)? The rate of return per quarter is %. The rate of return per year is %.A savvy investor paid $6000 for a 20-year $10,000 mortgage bond that had a bond interest rate of 8% per year, payable quarterly. Three years after he purchased the bond, market interest rates went down, so the bond increased in value. If the investor sold the bond for $11,500 three years after he bought it, what rate of return did the investor make (a) per quarter, and (b) per year (nominal)?5.
- Suppose that someone owns a 30 year $14,000 T-bond with a rate of 6%. After five years the bond is sold for cash, but the interest rates have risen to 8.5%. (a)How much has the bond paid in total for the first five years? (b)How much will the bond pay the person buying it over the next 25 years? (c)How much is the bond currently worth?You purchased a bond at a price of $800. In 15 years when the bond matures, the bond will be worth $5,000. It is exactly 8 years after you purchased the bond and you can sell the bond today for $3,300. If you hold the bond until it matures, what annual rate of return will you earn from today?Please assist with the following question below with handwritten working: An investor purchased a bond that pays $5 coupons annually at the end of every year for five years. The purchase price was $100 and it was redeemed at par after five years. If the annual effective inflation rate over the time period was 3%, calculate the real rate of return earned by the investor on this bond.
- Suppose that someone owns a 30 year $24,000 T-bond with a rate of 4%. After 6 years the bond is sold for cash, but the interest rates have fallen to 2.5%. (a)How much has the bond paid in total for the first 6 years? (b)How much will the bond pay the person buying it over the next 24 years? (c)How much is the bond currently worth?You buy a bond that pays annual interest payments of 7% of the bond’s face value of $1000. You initially pay $950 for the bond. You receive an annual interest payment after one year, then sell the bond for $880. What is your total rate of return on the investment, expressed as a percentage of the purchase price?A man purchases a bond for $900. The bond has a face value of $1,000 and pays semi-annual interest payments of $50 each. If the bond is paid in full after 10 years, what annual rate of return will the man receive?
- An investor buys a discount bond that pays him $75,000 after 6 years. The nominal interest rate for the first year is 6% and it decreases by 90 basis points (100 basis points 1%) up to the third year and then increases by 75 basis points thereafter, due to changes in government policy. If the investor sells his policy in four years to a businessman, what will be the yield to maturity and price for the businessman, assuming that the expectations hypothesis holds? The price of the bond at the fourth year-S Yield to maturity for the businessman during the purchase=% (Round your answer to two decimal places.)An investor buys a discount bond that pays him $65,000 after 6 years. The nominal interest rate for the first year is 5% and it decreases by 90 basis points (100 basis points=1%) up to the third yea and then increases by 75 basis points thereafter, due to changes in government policy. If the investor sells his policy in four years to a businessman, what will be the yield to maturity and price for the businessman, assuming that the expectations hypothesis holds? The price of the bond at the fourth year $ Vield to maturity for the businessman during the purchase=% (Round your answer to two decimal places) Suppose that, for the same bond the yield to maturity at the third year is 6.55% and there is a constant risk premium (x) applicable for holding the bond. What will be the value of ? *-% (Round your answer to two decimal places)A.) You bought a bond five years ago for $935 per bond. The bond is now selling for $980. It also paid $75 in interest per year, which you reinvested in the bond. Calculate the realized rate of return earned on this bond. B.) Refer again to the bond information in Problem 1. You expect to hold the bond for three more years, then sell it for $990. If the bond is expected to continue paying $75 per year over the next three years, what is the expected rate of return on the bond during this period?