An 4.6% coupon $1,000 par bond pays an annual coupon and will mature in 3 years.
ID: 2783767 • Letter: A
Question
An 4.6% coupon $1,000 par bond pays an annual coupon and will mature in 3 years. What should the yield to maturity on the bond be? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "%" sign in your response.)
If at the end of the first year the yield curve flattens out at 6.5%, what will be the 1-year holding-period return on the coupon bond? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "%" sign in your response.)
Below is a list of prices for zero-coupon bonds of various maturities.
Explanation / Answer
Maturity (Years) Price of $1,000 Par Bond (Zero-Coupon) Annualized rate 1 978.14 1.022348539 0.022349 2 876.02 1.068422411 0.068422 3 843.7 1.058288273 0.058288 1.155968377 1.049498887 YTM 4.95% $965.41 Return Value $ -34.59 Coupon 46 Total $11.41 HPR 1.14%
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.