On feb 12 2015 you buy a bond that pays a semi-annual, Ask an Expert

Economics

On Feb. 12, 2015, you buy a bond that pays a semi-annual coupon of $100 on Feb. 12 (including today) and Aug. 12 until the final coupon payment on Feb. 12, 2018. In addition, the bond will pay $10,000 on Feb. 12, 2018.

(a) If you purchased the bond at par today, what is the yield to maturity?

(b) Tomorrow (Feb. 13, 2015) you receive two pieces of information:

* The best interest rate at which you can invest funds is 2% (effective annual rate)

* Due to an unexpected change in your financial situation, you must sell the bond immediately.

What is the maximum price you can anticipate receiving for the sale of your bond?

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Business Economics, Economics

Category:- Business Economics
Reference No.:- M91295521

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