Softbank bond pays $100 coupon annually with face value $1000. Market interest rates are compounded annually,...

 

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Softbank bond pays $100 coupon annually with face value $1000. Market interest rates are compounded annually, please find the bond prices in the following table. Market interest rate 1-year bond price 5.17% (14) 10.17% (16) 30-year bond price (15) (17) (19) 20.17% (18) 7.Today Tim purchased a 15-year, $1,000 face value with 5% coupon rate compounding semi-annually (2.67% coupon rate payable every six month) at yield-to-maturity of 8% compounding semi-annually. Assume Tim would sell his bond in one year when yield-to-maturity would change to 6% compounding semi-annually. Over the one year inflation would be 1.67%. A) What is the bond price Tim paid today?, (20) B) What would be the bond price Tim would sell in one year? (21)_ C) What would be the real return of Tim's investment if we consider inflation? (22) (in percentage, two decimal places, for example 12.43%) Softbank bond pays $100 coupon annually with face value $1000. Market interest rates are compounded annually, please find the bond prices in the following table. Market interest rate 1-year bond price 5.17% (14) 10.17% (16) 30-year bond price (15) (17) (19) 20.17% (18) 7.Today Tim purchased a 15-year, $1,000 face value with 5% coupon rate compounding semi-annually (2.67% coupon rate payable every six month) at yield-to-maturity of 8% compounding semi-annually. Assume Tim would sell his bond in one year when yield-to-maturity would change to 6% compounding semi-annually. Over the one year inflation would be 1.67%. A) What is the bond price Tim paid today?, (20) B) What would be the bond price Tim would sell in one year? (21)_ C) What would be the real return of Tim's investment if we consider inflation? (22) (in percentage, two decimal places, for example 12.43%)

Answer rating: 100% (QA)

A To calculate the bond price Tim paid today we can use the present value formula for a bond Bond Pr... View the full answer