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Arjen owns investment A and 1 bond B. The total value of his holdings is 1,717 dollars. Investment A is expected to pay annual cash flows to Arjen of 158.15 dollars per year with the first annual cash flow expected later today and the last annual cash flow expected in 6 years from today. Investment A has an expected return of 16.54 percent. Bond B pays semi-annual coupons, matures in 23 years, has a face value of $1000, has a coupon rate of 10.2 percent, and pays its next coupon in 6 months. What is the yield-to-maturity for bond B? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

Bonds issued by Fairfax Paint have a par value of 1000 dollars, were priced at 988.96 dollars six months ago, and are priced at 911.57 today. The bonds pay semi-annual coupons and just made a coupon payment. If the bonds had a percentage return over the past 6 months (from 6 months ago to today) of -2.34 percent, then what was the current yield of the bonds 6 months ago? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

Financial Management, Finance

  • Category:- Financial Management
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