In: Finance
Jo-Anne just bought 200 bonds at a purchase price of R1 043.70 each. The bonds will mature in 7 years’ time and have a face value of R1 000.00. The coupon rate is 11% and is paid semi-annually. Answer the questions that follow:
1.1 Calculate the prevailing interest rate.
1.2 If the prevailing interest rate is 12%, what would happen to the price of the bond?
1.3 If Lee-Anne bought the bonds at R1 043.70 and the prevailing interest rate changes to 12%, what would the capital gains yield be?
Lee-Anne bought the bonds at R1 043.70 and after four years she
decides to sell the bonds while the prevailing interest rate is 9%.
Answer the following questions relating to this scenario:
1.4.1 Calculate the capital gains yield.
1.4.2 Calculate the current yield.
1.4.3 Calculate the total Rand return.
Note on the questions above. Can you provide me with a more detailed calculation as to how you got to your answers for the questions and not just the answer after formula has been provided. Thank you