Question

A friend is selling you today a bond purchased in 2010 with a 25-year maturity at $ 910.00. The bond has an annual coupon rate of $ 80. The prevailing rate in the current market is 10.0%. What is the value of the bond? Would you buy it if interest rates plan to drop to 6% in two years? How much would you earn if you wait for expiration?

PLEASE HELP QUICK

Answer #1

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Two years ago, you purchased a bond for $1036.67. The bond had
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is the bond's maturity date. What is your realized compound yield
on the bond?
Time
Prevailing Reinvestment Rate
0 (purchase date)
6.0%
End of Year 1
7.2%
End of Year 2 (maturity date)...

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Required:
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You have purchased a bond one year ago. When you purchased this
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[15 marks]
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I got answer as 6.88% but could not understand please can
someone elaborate

1.
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Bond maturity = 4
Coupon Rate = 5%
Face Value = $1,000
Annual Coupons
When you buy the bond the market interest rate = 4.50%
Immediately after you buy the bond the interest rate changes to
6.71%
What is the "reinvestment" effect in year 3 ?
2.
Bond E has the following
features:
Face value =
$1,000, Coupon Rate =
10%,
Maturity = 5 years, Yearly coupons
...

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1.)
Last year Janet purchased a $1,000 face value corporate bond
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calculations. Round your answer to two decimal places.
2.)
Bond X is noncallable and has 20 years to maturity, a...

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