A 4-year government bond makes annual coupon payments of 5.9% and offers a yield of 3.9% annually compounded. Assume t value is $1,000. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. a. Suppose that one year later the bond still yields 3.9%. What return has the bondholder earned over the 12-month period? b. Now suppose that the bond yields 2.9% at the end of the year. What return did the bondholder earn in this case? a. Rate of retur b. Rate of return 3.90 %
A 4-year government bond makes annual coupon payments of 5.9% and offers a yield of 3.9% annually compounded. Assume t value is $1,000. Note: Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. a. Suppose that one year later the bond still yields 3.9%. What return has the bondholder earned over the 12-month period? b. Now suppose that the bond yields 2.9% at the end of the year. What return did the bondholder earn in this case? a. Rate of retur b. Rate of return 3.90 %
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 8MC: Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for...
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