Maturity of the bonds, Consider the Leverage Unlimited,

Maturity of the bonds

Reference no: EM13202672

Consider the Leverage Unlimited, Inc., zero coupon bonds of 2008. The bonds were issued in 1990 for $100. Determine the yield to maturity (to the nearest 1⁄10 of 1 percent) if the bonds are purchased at the
a. Issue price in 1990. (Note: To avoid a fractional year holding period, assume that the issue and maturity dates are at the midpoint—July 1—of the respective years.)
b. Market price as of July 1, 2004, of $750.
c. Explain why the returns calculated in Parts a and b are different.

Reference no: EM13202672

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