Assuming that the bond is paying interest semi-annually

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Reference no: EM131966028

a. Suppose you purchase a 20-year,8% coupon bond with a yield to maturity of 10%. For a face value of $1000, what should be the initial price of the bond assuming that the bond is paying interest semi-annually?

b. If the bond’s yield to maturity changes to be 12%, what will its price be five years later?

c. If you purchased the bond at THE PRICE YOU COMPUTED AT (a) and sold it 5 years later, what would the rate of return of your investment be?

Reference no: EM131966028

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