# Question: Suppose that a portfolio manager purchases 10 million of par

Suppose that a portfolio manager purchases $10 million of par value of an eight-year bond that has a coupon rate of 7% and pays interest once per year. The first annual coupon payment will be made one year from now. How much will the portfolio manager have if she (1) holds the bond until it matures eight years from now, and (2) can reinvest all the annual interest payments at an annual interest rate of 6.2%?

## Answer to relevant Questions

(a) If the discount rate that is used to calculate the present value of a debt obligation’s cash flow is increased, what happens to the price of that debt obligation? (b) Suppose that the discount rate used to calculate ...A debt obligation offers the following payments: Years from Now Cash Flow to Investor 1........... $2,000 2........... $2,000 3........... $2,500 4........... $4,000 Suppose that the price of this debt obligation is ...Suppose that an investor with a five-year investment horizon is considering purchasing a seven-year 9% coupon bond selling at par. The investor expects that he can reinvest the coupon payments at an annual interest rate of ...Consider the following bond: Coupon rate = 11% Maturity = 18 years Par value = $1,000 First par call in 13 years Only put date in five years and putable at par value Suppose that the market price for this bond ...What is meant by the spread duration for a floating-rate bond?Post your question