Compute the realized return on the bond

Reference no: EM131960677

Question: Consider a coupon bond that pays 6% coupon semiannually, which matures in 6 years. The bond has paid coupon three times already, and 2 months passed since the last coupon. Compute the clean and dirty price of bond, assuming that the yield to maturity is 5%.

Consider a bond that pays an 8% coupon semiannually over the next 10 years. You intend to hold the bond over the next 2 years and then sell it. If the interest rate is expected to be around 4% over the next 2 years, but is expected to rise to 6%, compute the realized return on this bond.

Reference no: EM131960677

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