You buy a 20-year bond with a coupon rate of 8.8% that has a yield to maturity o

Question

You buy a 20-year bond with a coupon rate of 8.8% that has a yield to maturity of 9.8%. (Assume a face value of $1,000 and semiannual coupon payments.) Six months later, the yield to maturity is 10.8%. What is your return over the 6 months? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.)

You buy a 20-year bond with a coupon rate of 8.8% that has a yield to maturity of 9.8%. (Assume a face value of $1,000 and semiannual coupon payments.) Six months later, the yield to maturity is 10.8%. What is your return over the 6 months? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.)

Explanation / Answer

six months later Face Value (FV) $1,000 $1,000 Coupon rate 8.80% 8.80% PMT (1000 x 8.8%/2) semiannually $44 $44 Rate = 9.80%/2 4.90% 5.40% Nper = 20*2 40 40 Bond's Price PV(4.90%,40,-44,-1000) $913.02 $837.41 Return = ($837.41 - $913.02)/$913.02 -8.28%

Related Questions

Navigate

• Browse (All)
• Browse Y
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.