What is the rate of return

Reference no: EM13751134

Suppose you purchase a coupon bond with 20 years to maturity for $1,000. Assume the bondpays coupons of $70 per year.a. Suppose after one year you must sell the bond to help pay for tuition. Assume further thatinterest rates have risen so that the price of the bond has fallen to $950. What is the rate of return(in % terms) that you earned for holding this bond for one year?b. What was the size (in both dollars, $, and in % terms) of the capital gain or loss?c. Is it possible to make negative returns on a long-term U.S. government bond if the holdingperiod is less than maturity of the bond? Briefly explain.d. What name do we apply (and briefly explain) the type of risk long-term bond holders bearwhen the holding period is less than maturity?

Reference no: EM13751134

Questions Cloud

Write a program to find the largest of five numbers : Write a program to find the largest of five numbers obtained from the user with an input dialog box

Illustrate using a fully labeled supply and demand graph : What is the equilibrium wage and explain what the results of such a move are for the graham cracker market. In other words, will there be a SHORTAGE, a SURPLUS, or neither created? Why?

How much compensation will m receive : c) Assuming the two different prices for S, how much of the two goods will be produced if Fnch has the right to pollute? "the firms are not merged" d) Assuming the two different prices for S , how much of the two goods will be produced if M has the r..

Create a system wide clinical documentation program : Write a 2 page report (paper) on your plan to create and implement a system wide clinical documentation program at your organization

What is the rate of return : Suppose you purchase a coupon bond with 20 years to maturity for $1,000. Assume the bondpays coupons of $70 per year.a. Suppose after one year you must sell the bond to help pay for tuition. Assume further thatinterest rates have risen so that the pr..

Examine the current work system design : Examine the current work system design, and determine your organization's selected feasibility in the job design (i.e., technical, economic, behavioral). Assess key elements of the rationale in the work design competitive advantage.

How is interest rate that prevails in bond market determined : The demand curve for bonds would be shifted to the left by an increase in wealth - How is the interest rate that prevails in the bond market determined?

Create microsoft access database for doc-n-the-box pharmacy : Create a Microsoft Access database for the Doc-n-the-Box pharmacy. Create the table(s), field(s), data type(s), primary key(s), etc. for the database

Create a unique strategic plan for riordan manufacturing : Create a unique strategic plan for Riordan Manufacturing applying what you learned in the course discussions, readings, and your research

User Account

All Pages