How much would you pay for a perpetual bond that pays an annual coupon of $200 per year and yields on competing instruments are 5%? You would pay $. (Round your response to the nearest penny.) Part 2 If competing yields are expected to change to 8%, what is the current yield on this same bond assuming that you paid $4,000? The current yield is %.(Round your response to the nearest integer.) Part 3 If you sell this bond in exactly one year, having paid $4,000, and received exactly one coupon payment, what is your total return if competing yields are 8%? Your total return is %.
How much would you pay for a perpetual bond that pays an annual coupon of $200 per year and yields on competing instruments are 5%? You would pay $. (Round your response to the nearest penny.) Part 2 If competing yields are expected to change to 8%, what is the current yield on this same bond assuming that you paid $4,000? The current yield is %.(Round your response to the nearest integer.) Part 3 If you sell this bond in exactly one year, having paid $4,000, and received exactly one coupon payment, what is your total return if competing yields are 8%? Your total return is %.
Essentials of Economics (MindTap Course List)
8th Edition
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter19: The Basic Tools Of Finance
Section: Chapter Questions
Problem 3PA
Related questions
Question
How much would you pay for a perpetual bond that pays an annual coupon of $200 per year and yields on competing instruments are 5%?
You would pay $.
(Round your response to the nearest penny.)
Part 2
If competing yields are expected to change to 8%, what is the current yield on this same bond assuming that you paid $4,000?
The current yield is %.
(Round your response to the nearest integer.)
(Round your response to the nearest integer.)
Part 3
If you sell this bond in exactly one year, having paid $4,000, and received exactly one coupon payment, what is your total return if competing yields are 8%?
Your total return is %.
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