The bond has a face value of $1000 and is bought at par with a coupon rate
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The bond has a face value of $1000 and is bought at par with a coupon rate of 5%. After one year, the market yield on the bond changes to 9 %.
Yrs to maturity | Initial curr yield | Initial P(t) | P(t+1) | Capital Gain | Rate of Return |
1 | 0.05 | 1000 | 1000.000 | 0.000 | 0.05 |
2 | 0.05 | 1000 | |||
3 | 0.05 | 1000 | |||
5 | 0.05 | 1000 | |||
7 | 0.05 | 1000 |
The bond has a face value of $1000 and is bought at par with a coupon rate of 9%. After one year, the market yield on the bond changes to 5%.
Yrs to maturity | Initial curr yield | Initial P(t) | P(t+1) | Capital | Rate Of Return |
1 | 0.09 | 1000 | 1000.000 | ||
2 | 0.09 | 1000 | |||
3 | 0.09 | 1000 | |||
5 | 0.09 | 1000 | |||
7 | 0.09 | 1000 |
Related Book For
Corporate Finance
ISBN: 9781265533199
13th International Edition
Authors: Stephen Ross, Randolph Westerfield, Jeffrey Jaffe
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