Hello! I need some clarification on the steps for the problem below: Bond 1 has...
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Hello! I need some clarification on the steps for the problem below: • Bond 1 has a 5% annual coupon rate (i.e., a $50 coupon at the end of each year), and an $1000 maturity value, n = 5 years, YTM = 5% (pays a $50 annual coupon at the end of each year and $1,000 maturity payment at maturity at the end of year 5) • Suppose for the Coupon Bond 1 above that has a 5% annual coupon rate, $1,000 maturity value and 5 years to maturity, that rates go down to 4% right after you purchase the bond, so you have to invest your coupon payments at a 4% rate for the life of the bond, and you hold the bond to maturity. What will be your annual compound yield if the bond is held to maturity Hello! I need some clarification on the steps for the problem below: • Bond 1 has a 5% annual coupon rate (i.e., a $50 coupon at the end of each year), and an $1000 maturity value, n = 5 years, YTM = 5% (pays a $50 annual coupon at the end of each year and $1,000 maturity payment at maturity at the end of year 5) • Suppose for the Coupon Bond 1 above that has a 5% annual coupon rate, $1,000 maturity value and 5 years to maturity, that rates go down to 4% right after you purchase the bond, so you have to invest your coupon payments at a 4% rate for the life of the bond, and you hold the bond to maturity. What will be your annual compound yield if the bond is held to maturity
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