Question: A bond issued by Zephyr Balloons currently has a market

A bond issued by Zephyr Balloons currently has a market price equal to $1,080. The bond pays $120 interest annually.
a. If you buy the bond and its price does not change during the year, what is the total dollar return that you would earn if you sell the bond at the end of the year?
b. If the price of the bond increases to $1,100 during the year, what is the total dollar return that you would earn if you sell the bond at the end of the year? Compute the yield for the year.
c. If the price of the bond decreases to $1,000 during the year, what is the total return that you would earn if you sell the bond at the end of the year?


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  • CreatedNovember 24, 2014
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