Imagine that you pay $265 for a 4-year, 4% coupon bond with par value of $265.You intend
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Imagine that you pay $265 for a 4-year, 4% coupon bond with par value of $265.You intend to hold the bond for 1 year.That is, you are going to buy a 4-year bond and then 1 year later, you'll sell a 3-year bond. Imagine that the interest rate changes from 4% to 7% over the year that you hold the bond.Answer the following questions:
(1) What is your capital gain (as a percentage of the price paid) when the bond is sold?Round your answer to two decimal places.%
(2) What is your holding period return (as a percentage of the price paid) from holding this bond?Round your answer to two decimal places.%
Related Book For
Intermediate Accounting
ISBN: 978-0132162302
1st edition
Authors: Elizabeth A. Gordon, Jana S. Raedy, Alexander J. Sannella
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