1 assume that you purchase a 3-year bond with a 8 coupon, Ask an Expert

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1. Assume that you purchase a 3-year bond, with a 8% coupon, and a yield of 10%. after you purchase the bond, one-year interest rates are as follow, year 1 = 10%, year 2 = 8%, year 3 = 6% (these are the reinvestment rates). calculate the realized yield if you hold the bond to maturity. interest is paid annually. No Par value provided, but best to assume it is $1000.

a. 9.76% b. 8.37% c. 10.67% d. 14.0% e. 7.28%

2. Changes in a bonds cash flows associated with changes in yield would be reflected in the bond’s

a. Macaulay Duration b. Effective Duration c. Modified Duration

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92653737

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