Question

In: Finance

The YTM on the bond is the interest rate you earn on your investment if interest...

The YTM on the 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.

a.) You buy a bond with an annual coupon rate of 11 percent for $1,200. This bond has 19 years to maturity. What rate of return do you expect to earn on your investment? Assume a par value of $1,000.

ANSWER: 8.80%

b-1.) Two years from now, the YTM on your bond has decreased by 1 percent, and you decide to sell it. What price will your bond sell for?

b-2.) What is the HPY on your investment?

a.) Expected rate of return 8.80%
b-1.) Bond Price ?????????
b-2.) HPY ???????? %

Solutions

Expert Solution


Related Solutions

The YTM on a bond is the interest rate you earn on your investment if interest...
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 a bond with an annual coupon rate of 7 percent for $1,060. The bond has 21 years to maturity. What rate of return do you expect to earn on your investment? Assume a par value...
The YTM on a bond is the interest rate you earn on your investment if interest...
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 8.4 percent for $775. The bond has 7 years to maturity and a par value of $1,000. What rate of return do you expect to earn...
The YTM on a bond is the interest rate you earn on your investment if interest...
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 a bond with an annual coupon rate of 8 percent for $1,170. The bond has 16 years to maturity. What rate of return do you expect to earn on your investment? Assume a par value...
The YTM on a bond is the interest rate you earn on your investment if interest...
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 8.1 percent for $855. The bond has 7 years to maturity and a par value of $1,000. What rate of return do you expect to earn...
The YTM on a bond is the interest rate you earn on your investment if interest...
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 a bond with an annual coupon rate of 10 percent for $1,190. The bond has 18 years to maturity. What rate of return do you expect to earn on your investment? Assume a par value...
The YTM on a bond is the interest rate you earn on your investment if interest...
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 a bond with an annual coupon rate of 11 percent for $1,060. The bond has 20 years to maturity. What rate of return do you expect to earn on your investment? Assume a par value...
The YTM on a bond is the interest rate you earn on your investment if interest...
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 a bond with an annual coupon of 10 percent for $1,120. The bond has 17 years to maturity. What rate of return do you expect to earn on your investment? Assume a par value of...
The YTM on a bond is the interest rate you earn on your investment if interest...
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 a bond with an annual coupon of 11 percent for $1,060. The bond has 20 years to maturity. What rate of return do you expect to earn on your investment? Assume a par value of...
The YTM on a bond is the interest rate you earn on your investment if interest...
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 a bond with an annual coupon of 11 percent for $1,060. The bond has 20 years to maturity. What rate of return do you expect to earn on your investment? Assume a par value of...
The YTM on a bond is the interest rate you earn on your investment if interest...
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 a bond with an annual coupon rate of 8 percent for $1,100. The bond has 15 years to maturity. What rate of return do you expect to earn on your investment? Assume a par value...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT