The Blue Company issued a 10 year bond. The bond pays 6% semi-annually with a face value of $1,000. After 5 years, the YTM is 6.85% and the bond sells for $985.

If interest rates are expected to further rise in the next quarter, would it be profitable to buy the bond today and sell it in the next quarter? If not, what other alternative can you suggest?

Answer rating: 100% (QA)

SOLUTION To determine whether it would be profitable to buy the bond today and sell it in the next q... View the full answer