5) A 6-year 7.2% annual coupon bond is selling to yield 6.5%. The bond pays interest...

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5) A 6-year 7.2% annual coupon bond is selling to yield 6.5%. The bond pays interest annually. The par value of the bond is $100. a. What is the price of the 6-year 7.2% coupon bond selling to yield 6.5%? b. What is the price of this bond one year later assuming the yield is unchanged at 6.5%? c. Suppose that one year later the yield of the bond decreases to 6.3%. What is the price change attributable to moving to maturity assuming no change in the discount rate? What is the price change attributable to a decrease in the discount rate from 6.5% to 6.3%? What is the total price change? 5) A 6-year 7.2% annual coupon bond is selling to yield 6.5%. The bond pays interest annually. The par value of the bond is $100. a. What is the price of the 6-year 7.2% coupon bond selling to yield 6.5%? b. What is the price of this bond one year later assuming the yield is unchanged at 6.5%? c. Suppose that one year later the yield of the bond decreases to 6.3%. What is the price change attributable to moving to maturity assuming no change in the discount rate? What is the price change attributable to a decrease in the discount rate from 6.5% to 6.3%? What is the total price change?

Answer rating: 100% (QA)

To calculate the price of the 6year 72 annual coupon bond we can use the present value of cash flows ... View the full answer