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How much would you pay for a perpetual bond that pays an annual coupon of $50 per year and yields on competing instruments are 20%?

You would pay $ 250.

If competing yields are expected to change to 10%, what is the current yield on this same bond assuming that you paid $250?

The current yield is 20%.

If you sell this bond in exactly one year, having paid $250, and received exactly one coupon payment, what is your total return if competing yields are 10%?

Your total return is ______. (Round your response to two decimal places.) -- Please help with this answer.

Only answer TOTAL RETURN question and how to calculate this answer.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92650824

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