) A Chinese steel producer has issued a 3-year, 8 percent coupon bond with face value RMB...
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Question:
) A Chinese steel producer has issued a 3-year, 8 percent coupon bond with face value RMB 1,000,000. i) How much is this bond worth to you if the interest rate is 8%? ii) How much is this bond worth to you if the interest rate is 10%? iii) Suppose you buy this bond at par and hold it for one year. When you sell the bond, after the coupon for the first year having been paid, the interest rate is 5%. What is the price of the bond when you sell it? What is your holding period yield?
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