Question: please do question 6 Question 5 1 pts You buy a semi-annual coupon paying bond with exactly 2 years to maturity, a coupon rate of
please do question 6
Question 5 1 pts You buy a semi-annual coupon paying bond with exactly 2 years to maturity, a coupon rate of 6%, and a bond-equivalent yield of 6%. Suppose that in exactly one year just before you receive the coupon payment, interest rates rise to 8% on similar bonds. If you sell the bond right after you receive the coupon in exactly one year, what is your return? Assume that you can reinvest the first coupon at the prevailing bond-equivalent annual rate of 6%. Choose the closest answer. 04.2% O 6% 0 -5.8% O 1.2% 0 -4.2% Question 6 1 pts A semi-annual coupon-paying bond's coupon rate is equal to its effective annual yield. As a result, the bond must be trading at a: O Par O Discount O Premium Could be trading at a premium, discount or at par
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