Suppose that after one year and after you receive one, Ask an Expert

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Suppose that after one year and after you receive one coupon payment, you decide to sell your note. Your note is now a two year note with one coupon payment after 1 year and another after year 2. Consider the following two scenarios:

Scenario #1 - interest rates on what is now a two year note (i.e., your note) have fallen to 1.00%

Scenario #2 - interest rates on what is now a two year note (i.e., your note) have risen to 4%

c) Calculate the price that you can sell your note for under scenario #1 and the associated rate of return when you sell your note given Scenario #1

d) Calculate the price that you can sell your note for under scenario #2 and the associated rate of return when you sell your not.

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92774191

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