Please correct answer and don't use hand raiting You just paid $980.30 for an 8% (annual) coupon bond with a Face Value of $1,000 thatmatures in 5 years. You plan to hold the bond only for 1-year. If you want to earn a 9% rate ofreturn on this investment, what price must you sell the bond for? Is this realistic?

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Answered: You just paid $980.30 for an 8%…

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 that you bought a 14% Drexler bond with time to maturity of 9 years for $1,379.75 (semiannual coupons, interest rate=8%). After another ½ year, you sold the bond. Assuming that the required rate of return remained at 8%, what would the selling price be? What is the rate of return from this investment? If the interest rate dropped by 25 basis points, what would the selling price be? What would the rate of return from this investment be?
You are considering the purchase of a perpetual bond that pays you $174 per year for the foreseeable future. If you require a 5.85% rate of return on this bond investment, what is a fair price for the bond that you would be willing to pay today? To nearest $0.01
Please show how to work this out.
You purchased a bond for 1,100. The bond has a coupon rate of 9 percent, which is paid semiannually. It matures in 17 years and has a par value of 1,000. What is your expected rate of return. How can i solve this with a financial calculator?
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I need assistance with the following: Suppose you have bough the above zero-coupon bond, with value and duration equal to your obligation. Now suppose the rates immediately increase to 9%. What happens to your net position? How much is the tuition obligation? How much is the zero-coupon bond? How much is the net position?
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You just paid $980.30 for an 8% (annual) coupon bond with a Face Value of $1,000 that matures in 5 years. You plan to hold the bond only for 1-year. If you want to earn a 9% rate of return on this investment, what price must you sell the bond for? Is this realistic?