An investor is considering the purchase of an 8%, 18-year corporate bond that’s being priced to yield 10%. She thinks that in a year, this bond will be priced in the market to yield 9%. Using annual compounding, find the price of the bond today and in 1 year. Next, find the holding period return on this investment, assuming that the investor’s expectations are borne out.
Answer to relevant QuestionsA bond is currently selling in the market for $1,170.68. It has a coupon of 12% and a 20-year maturity. Using annual compounding, calculate the promised yield on this bond. Assume that an investor is looking at 2 bonds: Bond A is a 20-year, 9% (semiannual pay) bond that is priced to yield 10.5%. Bond B is a 20-year, 8% (annual pay) bond that is priced to yield 7.5%. Both bonds carry 5-year call ...A bond has a Macaulay duration of 8.62 and is priced to yield 8%. If interest rates go up so that the yield goes to 8.5%, what will be the percentage change in the price of the bond? Now, if the yield on this bond goes down ...A $1,000 par value bond has a current price of $800 and a maturity value of $1,000 and matures in 5 years. If interest is paid semiannually and the bond is priced to yield 8%, what is the bond’s annual coupon rate? The Well-Managed Closed-End Fund turned in the following performance for the year 2013. a. Based on this information, what was the NAV-based HPR for the WMCEF in 2013? b. Find the percentage (%) premium or discount at ...
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