Question the ytm on a bond is the interest rate you earn on, Ask an Expert

Finance

Question: The YTM on a bond is the interest rate you earn on your investment if interest rates don't change. If you actually sell the bond before it matures, your realized return is known as the holding period yield (HPY).

a. Suppose that today you buy an annual coupon bond with a coupon rate of 8.3 percent for $785. The bond has 8 years to maturity and a par value of $1,000. What rate of return do you expect to earn on your investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Two years from now, the YTM on your bond has declined by 1 percent, and you decide to sell.

b. What price will your bond sell for? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

What is the HPY on your investment? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

View complete question

Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M92606406

Have any Question?Write your Review or question?

Related Questions in Basic Finance

Assume the probability of a male being lt 21 is 1867 the

Assume the probability of a male being 50 is 4.80%, and the probability of being female and > 50 is 8.00%. Based on this information and the information in the tables above, what is the probability that someone

Question - we bought a stock for 4585 four years ago and we

Question - We bought a stock for $45.85 four years ago and we can sell it for $59.13 today. The stock does not pay dividends. What annual rate of return have we earned?

You are considering investing in a start up project at a

You are considering investing in a start up project at a cost of $100,000. You expect the project to return $500,000 to you in seven years. Given the risk of this project, your cost of capital is 20%. The NPV for this pr ...

Industries recently commissioned management consultants to

Industries recently commissioned management consultants to estimate an appropriate rate for investment projects with the same risk as the firm. Unfortunately, part of the report was lost, and you have been asked to calcu ...

You deposit 286 dollars in an account every year for 4

You deposit 286 dollars in an account every year for 4 years that earns 4 percent annual interest. What is the present value of your deposits today (the present value of the annuity at time 0)? (your first deposit will b ...

How much of the ccc is under the direct control of

How much of the CCC is under the direct control of financial managers? For the portion that is not under direct control of financial managers, what are the complications that result when financial management decides that ...

You need 5000 to buy a new stereo for your car if you have

You need $5,000 to buy a new stereo for your car. If you have $1,500 to invest at 6% compounded annually, how long will you have to wait to buy the stereo? All work and formulas leading up to the answer have to be shown

You want to invest in a stock that pays 5 annual cash

You want to invest in a stock that pays $5 annual cash dividends for the next four years. At the end of the four years, you will sell the stock for $20. If you want to earn 12% on this investment, what is a fair price fo ...

If hairbran stylists is evaluating a project that costs

If Hairbran Stylists is evaluating a project that costs $42,000 and the project will generate $11,000 over each of the next 5 years with a required rate of return of 9%, should they accept the project? What is the net pr ...

A division of carla vista manufacturing is considering

A division of Carla Vista Manufacturing is considering purchasing for $1,710,000 a machine that automates the process of inserting electronic components onto computer motherboards. The annual cost of operating the machin ...

4,153,160 Questions Asked
13,132 Experts
2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

Recent Questions

Ask Basic Finance Expert