What is the selling price at the end of the holding period

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Reference no: EM131883756

You buy a 7% annual coupn bond that matures in 10-years. The yield-to-maturity when you purchase the bond is 8%. After you purchase the bond, the yield changes to 9% and stays there. You sell the bond after 5 years.

a) What is the selling price at the end of the holding period?

b) What is the capital loss on the sale (based on the carrying value of the bond)?

c) What is the future value of the reinvested coupons at the end of the holding period?

d) What is the horizon rate of return based on the initial buying price and the total return (the FV of coupons and selling price)? Answer to the nearest 0.01%

Reference no: EM131883756

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