Six years ago, you bought a 1 5 - year Bond at the price of $ 1

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Question:

Six years ago, you bought a

15 -

year Bond at the price of $

1050

per share. The bond has a

8 %

coupon and a $

1000

par value. Today, the YTM on a

9 -

year,

8 %

coupon bond with similar risk is

6 % .

You can either hold the bond till its maturity or sell it to the market today. Which strategy gives you a higher annual return? How much higher?

Posted Date: May 18, 2024 01:19 PM

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Six years ago, you bought a 1 5 - year Bond at the price of $ 1

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