Question: stable cash flow , which is going to be a challenge given that the fashion industry is changing constantly and he can get stuck with

stable cash flow , which is going to be a challenge given that the fashion industry is changing constantly and he can get stuck with unsold inventory . To allay their fears , Pierson decides to investment some of the capital raised into Italian 10 year Government Bonds . He explains that the return from these bonds will be used to improve hi operations , Ignoring currency exposure , consider the following : ( 15 PTS a . He decides to invest into ten year 1 090 EURO emment bond with 3% coupon rate and semi - annual coupons . If the bond is currently trading for a pride of 957 35 Euros what is the band's yield to maturity ? Assume is buys 10 000 of these bands . ( 10 PTS ) b . Suppose he is told that the yield to maturity has increased to 15 % ( expressed as an APP with semiannual compounding ) . What price is the bond trading for now ? (5 PTS )

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