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Consider a coupon bond that has a $1000 par value and a coupon rate of 10%. The bond is currently selling for $1044.89 and has two years to maturity.
a) What is the bond's yield to maturity?
b) If the expected price of this bond next year is $1000. Calculate the expected rate of capital gain/loss and the expected rate of return if the bondholder sells it next year?
Consider a coupon bond that has a $1000 par value and a coupon rate of 10%. The bond is currently selling for $1044.89 and has two years to maturity.
a) What is the bond's yield to maturity?
b) If the expected price of this bond next year is $1000. Calculate the expected rate of capital gain/loss and the expected rate of return if the bondholder sells it next year?
Darryn D'SouzaLv10
28 Sep 2019
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5. Consider the following bonds that pay annual coupons (the next coupon will be paid in one year). Find the present value of each bond assuming a par value of $1,000 and a relevant interest rate of 4%.
|
Bond |
A |
B |
C |
|
Coupon rate |
3% |
4% |
5% |
|
Time to maturity |
1 year |
2 years |
3 years |
