Suppose your friend tells you that she recently purchased a 5-year $2,000.00 bond with a 9% coupon. A month later, she saw it quoted at 91:12, but she does not know what this means. You can tell by the way the bond is priced that she has a bond; otherwise it would have been priced . You explain that the market price of her bond is now , meaning it is now a bond. Based on the market price of the bond you calculated, you can tell that market interest rates have gone since the bond was issued. The current yield of the bond is now .
Suppose your friend tells you that she recently purchased a 5-year $2,000.00 bond with a 9% coupon. A month later, she saw it quoted at 91:12, but she does not know what this means. You can tell by the way the bond is priced that she has a bond; otherwise it would have been priced . You explain that the market price of her bond is now , meaning it is now a bond. Based on the market price of the bond you calculated, you can tell that market interest rates have gone since the bond was issued. The current yield of the bond is now .
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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Suppose your friend tells you that she recently purchased a 5-year $2,000.00 bond with a 9% coupon. A month later, she saw it quoted at 91:12, but she does not know what this means.
You can tell by the way the bond is priced that she has a bond; otherwise it would have been priced . You explain that the market price of her bond is now , meaning it is now a bond.
Based on the market price of the bond you calculated, you can tell that market interest rates have gone since the bond was issued. The current yield of the bond is now .
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