You invest in a three-year bond with a coupon of 7% at a price of 98.5%....
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You invest in a three-year bond with a coupon of 7% at a price of 98.5%. What is your income yield? (2) - You hold a corporate zero-coupon bond which matures (at 100%) in two years. The company pays 250 bp above LIBOR (London Inter Bank Offer Rate) for its borrowing. 2- year LIBOR is currently 3.6%. What is the sale price of the bond today? (3) You invest in a three-year bond with a coupon of 7% at a price of 98.5%. What is your income yield? (2) - You hold a corporate zero-coupon bond which matures (at 100%) in two years. The company pays 250 bp above LIBOR (London Inter Bank Offer Rate) for its borrowing. 2- year LIBOR is currently 3.6%. What is the sale price of the bond today? (3)
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1 To calculate the income yield of a bond you need to divide the annual coupon payment by the bonds ... View the full answer
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