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You invested $100,000 in a fixed semi-annual coupon bond when these bonds were issued by Forest Investors Limited. The details of this bond, on issue, are as follows:

Bond price: 100 (the price per $100 of face value)

Coupon rate: 9.00% per annum, compounded half yearly

Term to maturity: five years

Use a financial calculator where appropriate.

(a) After two years, yields to maturity on identical securities are 8.00% per annum, compounded half yearly. What is the price of this Forest Investors bond in the market?

(b) find out your annual holding period return over the first two years.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M939645

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