Treasury bond issued by U.S. government has 7 years of maturity. Coupon rate is 6% paid annually, Face value is $1000 and yield to maturity (Kd) equals 5%. 1. What is the price of bond (VB)? Find the discount or premium amount? 2. Calculate the current yield and expected capital gain yield? 3. If the discount rate is expected to raise up to 8%. What is the bond current market price (VB)?

Treasury bond issued by U.S. government has 7 years of maturity. Coupon rate is 6% paid annually, Face value is $1000 and yield to maturity (Kd) equals 5%. 1. What is the price of bond (VB)? Find the discount or premium amount? 2. Calculate the current yield and expected capital gain yield? 3. If the discount rate is expected to raise up to 8%. What is the bond current market price (VB)?

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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