Solution-What cash flows will you pay and receive from

What cash flows will you pay and receive from investment

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Reference no: EM132819858

Suppose you purchase a 10 year 5%(semi-annual pay) coupon bond. You plan to hold the bond for 6 months and then sell it.

Problem 1: if the bond's yield to maturity was 4% when you purchased and sold the bond, what cash flows will you pay and receive from you investment in the bond per $1000 face value?

Problem 2: what is the six-month rate of return on your investment?

Problem 3: what would have been the rate of return if instead the yield to maturity increases to 5% just when you sell the bond in six months? without doing computations, what would have happened in the scenario above if you had held a 5 year bond for six months instead of a 10 year bond(assuming its yield to maturity was also 4% when you purchased?

Reference no: EM132819858

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What cash flows will you pay and receive from investment

Reference no: EM132819858

Reference no: EM132819858

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