On Aug 22, 2017 Amazon com issued a semiannual bond with coupon rate of 3 15 and maturity date of Aug 22, 2027 The bond pays coupon on Feb 22 and Aug 22 every year The current bond YTM is 0 96 You bought the bond on Aug 22, 2020 In September 2020, market rates decreased by 0 25 a) You plan to sell the bond in 4 years Find out your semi annual holding period return (assume you compound semi annually) b) Is your semi annual holding period return higher, lower or the same as the original semi annual YTM Explain

Question: On Aug. 22, 2017 Amazon.com issued a semiannual bond with coupon rate of 3.15% and maturity date of Aug. 22, 2027. The bond pays coupon

On Aug. 22, 2017 Amazon.com issued a semiannual bond with coupon rate of 3.15% and maturity date of Aug. 22, 2027. The bond pays coupon on Feb. 22 and Aug. 22 every year. The current bond YTM is 0.96%. You bought the bond on Aug. 22, 2020. In September 2020, market rates decreased by 0.25%.

a) You plan to sell the bond in 4 years. Find out your semi-annual holding period return (assume you compound semi-annually).
b) Is your semi-annual holding period return higher, lower or the same as the original semi-annual YTM? Explain.

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