How much would you pay for a perpetual bond that pays an annual coupon of $200 per year and yields on competing instruments are 10%?You would pay $ 2000. (Round your response to the nearest penny)If competing yields are expected to change to 12%, what is the current yield on this same bond assuming that you paid$2,000?The current yield is 10%. (Round your response to the nearest integer.)If you sell this bond in exactly one year, having paid $2,000, and received exactly one coupon payment, what is your total return if competing yields are 12%?Your total return is %. (Round your response to two decimal places)

Price of perpetual bond is present value of coupon payment.

year and ylelds on compe d pay $ 2000. (Round your response to the nearest penny) ing yields are expected to change to 12%, what is the current yield on this same bond assuming that you ent yield is 10%. (Round your response to the nearest integer.)

year and ylelds on compe d pay $ 2000. (Round your response to the nearest penny) ing yields are expected to change to 12%, what is the current yield on this same bond assuming that you ent yield is 10%. (Round your response to the nearest integer.)

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

How much would you pay for a perpetual bond that pays an annual coupon of $200 per year and yields on competing instruments are 10%?
You would pay $ 2000. (Round your response to the nearest penny)
If competing yields are expected to change to 12%, what is the current yield on this same bond assuming that you paid
$2,000?
The current yield is 10%. (Round your response to the nearest integer.)
If you sell this bond in exactly one year, having paid $2,000, and received exactly one coupon payment, what is your total return if competing yields are 12%?
Your total return is %. (Round your response to two decimal places)

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