A company issued a bond that has 10 years to maturity with 5% coupon rate and semiannual coupons. Currently, the bond se

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answerhappygod
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A company issued a bond that has 10 years to maturity with 5% coupon rate and semiannual coupons. Currently, the bond se

Post by answerhappygod »

A company issued a bond that has 10 years to maturity with 5%
coupon rate and semiannual coupons. Currently, the bond sells at a
yield to maturity of 6% APR with semiannual compounding.
a. What is the current price of the bond?
b. What rate of return will be earned by an investor, who
purchases the bond and holds it for 2 years if the yield to
maturity increased to 8% at the end of the 2 nd year?
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