IDNLearn.com connects you with a global community of knowledgeable individuals. Find the answers you need quickly and accurately with help from our knowledgeable and experienced experts.
The YTM on a bond is the interest rate you earn on your investment if interest rates don’t change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY).
a.
Suppose that today you buy a bond with an annual coupon rate of 10 percent for $1,050. The bond has 19 years to maturity. What rate of return do you expect to earn on your investment? Assume a par value of $1,000. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b-1. Two years from now, the YTM on your bond has declined by 1 percent, and you decide to sell. What price will your bond sell for? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
b-2. What is the HPY on your investment?
Sagot :
We value your presence here. Keep sharing knowledge and helping others find the answers they need. This community is the perfect place to learn together. Your search for answers ends at IDNLearn.com. Thank you for visiting, and we hope to assist you again soon.