Assume that an investor wishes to purchase a 20-year bond, Ask an Expert

Finance

Assume that an investor wishes to purchase a 20-year bond with a maturity value of $1,000 and semiannual coupon at an annual rate of 8%. Must show all work and include TVM input keys.

a. If the investor requires a 10 percent simple yield to maturity on this investment, what is the maximum price she should be willing to pay for the bond?

b. Assume that you purchase the bond today but will only hold it for 2 years. You believe that interest yields of similar bonds will go down to 8 percent. At what price you will sell it for in two years?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92856227

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