You purchase an ABC 10%, 30 Year bond with a $100 face value for 109.72 1) What

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You purchase an ABC 10%, 30 Year bond with a $100 face value for 109.72

1) What is the yield to maturity of the bond?

2) What is the current yield on the bond?

3) If you bought the bond today and sold it after 1 year at a tm of 10% what is your cash flow yield ?

4) What is your realized compound yield if your investment horizon was 11 years and the reinvestment rate (R) was 11%?

5) What is the percentage change in the price of the bond if interest rates increase by 25 basis points? (assume it has a duration of 11 years)

Related Book For answer-question

Financial Management Core Concepts

ISBN: 978-0132671033

2nd edition

Authors: Raymond M Brooks

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Posted Date: Feb 06, 2023 01:41 AM

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You purchase an ABC 10%, 30 Year bond with a $100 face value for 109.72 1) What

Question:

Expert Answer:

To calculate the yield to maturity of a bond you can use the formula yield to maturity c P 365 t F P 1 365 t Where c coupon payment which is 10 for this bond P purchase price which is 10972 for this b... View the full answer

Financial Management Core Concepts

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