Question

You purchased an annual interest coupon bond one year ago that had six years remaining to...

You purchased an annual interest coupon bond one year ago that had six years remaining to maturity at that time. The coupon interest rate was 10% and the par value was $1,000. At the time you purchased the bond, the yield to maturity was 8%. If you sold the bond after receiving the first interest payment and the yield to maturity continued to be 8%, your annual total rate of return on holding the bond for that year would have been

11.95%.

7.82%.

7.00%.

None of the options

8.00%.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Annual return on holding the bond for 1 year= 8.00%

The answer is last option.

Details as follows:

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
You purchased a 5-year annual-interest coupon bond 1 year ago. Its coupon interest rate was 6%,...
You purchased a 5-year annual-interest coupon bond 1 year ago. Its coupon interest rate was 6%, and its par value was $1,000. At the time you purchased the bond, the yield to maturity was 4%. If you sold the bond after receiving the first interest payment and the bond's yield to maturity had changed to 3%, your annual total rate of return on holding the bond for that year would have been approximately _________. 0.6% 8.9% 5% 5.5%
Six months ago you purchased a $100,000, 2% coupon bond with 7 years to maturity. The...
Six months ago you purchased a $100,000, 2% coupon bond with 7 years to maturity. The bond makes semi-annual coupon payments, and, at the time of purchase, had a yield-to-maturity of 2.40%, annual rate, compounded semiannually. a) Calculate price (per hundred dollars of face value) you paid for the bond. b) Today, after noticing that the yield has dropped to 2.10%, you sell the bond. What is the current price (per hundred dollars of face value)? c) Calculate your gains...
Three years ago, you bought a bond for $737.64. At that time, the bond had seven...
Three years ago, you bought a bond for $737.64. At that time, the bond had seven years remaining until maturity. The bond has a coupon rate of 8 percent (stated as an annual rate) and a par value of $1,000. Coupon payments are made semiannually. a. What was the yield to maturity when you purchased the bond three years ago? b. Assume the yield to maturity today is the same as the yield to maturity you computed in part A....
Six years ago you purchased a $1,000 par bond with 13 years to maturity and a...
Six years ago you purchased a $1,000 par bond with 13 years to maturity and a 6.5% semi-annual coupon at a price of $1,200. If the yield to maturity of the bond remained constant, what should be the price today?
You are considering a coupon bond (par=$1,000) that pays semi-annual interest with a coupon rate of...
You are considering a coupon bond (par=$1,000) that pays semi-annual interest with a coupon rate of 6%. The bond currently has a bid price of 116.89 and an ask price of 117.00. If the last interest payment was made 60 days ago, and there are 180 days between the last interest payment and the next interest payment, what is the invoice price of the bond? A. $1,180.0 B. $1,170.0 C. $1,190.6 D. $1,168.9 You purchase a 10-year T-note which has...
Two years ago an investor purchased a 4% semi-annual compounding coupon bond with a remaining maturity...
Two years ago an investor purchased a 4% semi-annual compounding coupon bond with a remaining maturity of 20 years at a price of (at that time) 90% of par. Today, i.e. two years after the purchase, the investor realizes that the bond has exactly the same price like it had two years ago (i.e. 90%). Based on this information, which of the following answers is correct: a) The YTM of the 4% Bond today is the higher than two years...
One year ago, an investor purchased a 10-year, $1,000 par value, 8% semiannual coupon bond with...
One year ago, an investor purchased a 10-year, $1,000 par value, 8% semiannual coupon bond with an 8% yield to maturity. Now, one year later, interest rates remain unchanged at 8%. If the investor sells the bond today (immediately after receiving the second coupon payment, and with no transaction costs), he will have: A. a capital gain of $80. B. a capital loss of $80. C. no capital gain or loss.
4. Two years ago, you purchased a zero coupon bond with a 5-year time to maturity,...
4. Two years ago, you purchased a zero coupon bond with a 5-year time to maturity, a 6% YTM, and a par value of $1,000. The bond’s YTM today is 5%. If you sell the bond today, what is the annual rate of return on your investment?
4. Two years ago, you purchased a zero coupon bond with a 5-year time to maturity,...
4. Two years ago, you purchased a zero coupon bond with a 5-year time to maturity, a 6% YTM, and a par value of $1,000. The bond’s YTM today is 5%. If you sell the bond today, what is the annual rate of return on your investment? v
One year ago, you purchased an 8% coupon rate bond when it was first issued and...
One year ago, you purchased an 8% coupon rate bond when it was first issued and priced at its face value of $1,000. Yesterday the bond paid its second semi-annual coupon. The bond currently has 7 years left until maturity and has a yield to maturity of 12%. If you sell the bond today, what will your return have been from this investment during the year you held the bond and collected the coupon payments?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT