You purchase a 20-year bond that has a par value of $1,000 and pays an annual coupon of $100 ($50 every six months). The yield to maturity was 6.0 percent when you purchased this bond. Now, right after you purchased this bond, the yield (reinvestment rate) went up to 13.0 percent (6.5 percent every six months). Determine your realized compounded yield if you hold this bond for 10 years, then sell it, and reinvestment rates stay at 13.0 percent for the entire 10-year period. The yield-to-maturity when you sell the bond is also 13.0 percent. Enter your answer in decimal format, to four decimal places. For example, if your answer is 3.11%. enter "0.0311". Note that Canvas will delete trailing zeros, if entered.

You purchase a 20-year bond that has a par value of $1,000 and pays an annual coupon of $100 ($50 every six months). The yield to maturity was 6.0 percent when you purchased this bond. Now, right after you purchased this bond, the yield (reinvestment rate) went up to 13.0 percent (6.5 percent every six months). Determine your realized compounded yield if you hold this bond for 10 years, then sell it, and reinvestment rates stay at 13.0 percent for the entire 10-year period. The yield-to-maturity when you sell the bond is also 13.0 percent. Enter your answer in decimal format, to four decimal places. For example, if your answer is 3.11%. enter "0.0311". Note that Canvas will delete trailing zeros, if entered.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 4P

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You purchase a 20-year bond that has a par value of $1,000 and pays an annual coupon of $100 ($50 every six months). The yield to maturity was 6.0 percent when you purchased this bond. Now, right after you purchased this bond, the yield (reinvestment rate) went up to 11.0 percent (5.5 percent every six months). Determine your realized compounded yield if you hold this bond for 10 years, then sell it, and reinvestment rates stay at 11.0 percent for the entire 10-year period. The yield-to-maturity when you sell the bond is also 11.0 percent.
You purchase a 20-year bond that has a par value of $1,000 and pays an annual coupon of $100 ($50 every six months). The yield to maturity was 6.0 percent when you purchased this bond. Now, right after you purchased this bond, the yield (reinvestment rate) went up to 11.0 percent (5.5 percent every six months). Determine your realized compounded yield if you hold this bond for 10 years, then sell it, and reinvestment rates stay at 11.0 percent for the entire 10-year period. Enter your answer in decimal format, to four decimal places. For example, if your answer is 3.11%, enter "0.0311".
Suppose you purchase a 10-year 5% (semi-annual pay) coupon bond. You plan to hold the bond for six months and then sell it. If the bond’s yield to maturity was 4% when you purchased and sold the bond, what cash flows will you pay and receive from your investment in the bond per $1000 face value?
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Please provide complete step by step asnwer: You purchased an annual interest coupon bond one year ago that had six years remaining to maturity at that time. The coupon interest rate was 10%, and the par value was $1,000. At the time you purchased the bond, the yield to maturity was 8%. If you sold the bond after receiving the first interest payment and the yield to maturity continued to be 8%, your annual total rate of return on holding the bond for that year would have been A) 7.00%. B) 7.82%. C) 8.00%. D) 11.95%. E) None of the options are correct.
A bond with a face value of $5,000 pays interest of 8% per year. This bond will be redeemed at par value at the end of its 20-year life, and the first interest payment is due one year from now. Solve, (a) How much should be paid now for this bond in order to receive a yield of 10% per year on the investment? (b) If this bond is purchased now for $4,600, what annual yield would the buyer receive?