# ABC Corp. issues a 5 years bond in Zomboland where bond investors are paid interest on a

Fantastic news! We've located the answer you've been seeking!

## Question:

ABC Corp. issues a 5 years bond in Zomboland where bond investors are paid interest on a quarterly basis and each bond has a maturity value of $5,000. If the bond's annual coupon rate is 2.3% and investors expect a rate of return of 6.3% what should be the price of the bond today?

You just purchased a $1,000 par value, 5-year bond with a coupon rate of 7.00% (paid annually) that has a yield to maturity of 6.60%. If you sell this bond in 2 years for $1,050, what would be your effective annual rate of return, if coupon payments are reinvested at a 2.90% annual interest rate?

**Related Book For**

## Foundations of Financial Management

ISBN: 978-1259024979

10th Canadian edition

Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta