Question

An investor believes a bond can be sold in three years at a price of $935....

An investor believes a bond can be sold in three years at a price of $935. Currently the bond has a price of $900 and 4% coupon rate, $1,000 par value and ten years until maturity. The investor has a realized compound yield of 5.65%.
  • A. True
  • B. False
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Answer #1

A. True

Realized Yield =rate(nper,pmt,pv,fv)
= 5.67%
Where,
nper = 3
pmt = $     40.00
pv = $ -900.00
fv = $   935.00
Note:
There may be decimal place difference due to rounding off difference.
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