Consider a five-year bond with a face value of $500,000 and semi-annual coupon of $19,000. The market
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Question:
Consider a five-year bond with a face value of $500,000 and semi-annual coupon of $19,000. The market yield is 7.00% p.a.
(a) What is the price of the bond?
(b) We hold the bond for 1.5 years and then sell it at a yield of 7.50% p.a. What is the selling price and what is the holding period yield p.a. on this investment? (Show all your workings and round off your result to two decimals)
Expert Answer:
a Price of a bond is the present value of its cash flows The cash flows are the coupon payments a... View the full answer
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