Suppose you have just bought a 15-year, 8% semiannual coupon bond. Your purchasi
ID: 2705149 • Letter: S
Question
Suppose you have just bought a 15-year, 8% semiannual coupon bond. Your purchasing price of the bond implies that the current YTM is 6%. Which of the followings is true?
Your purchasing price should have been lower than the par value.
The cash flows associated with the bond are an annuity for the 15 year period and a lump sum at the end.
You will receive a $30 coupon payment every six month.
You would earn 8% rate of return if you hold this bond until the maturity.
Your purchasing price should have been lower than the par value.
The cash flows associated with the bond are an annuity for the 15 year period and a lump sum at the end.
You will receive a $30 coupon payment every six month.
You would earn 8% rate of return if you hold this bond until the maturity.
Explanation / Answer
The cash flows associated with the bond are an annuity for the 15 year period and a lump sum at the end.
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.