Description of this paper

Michael buys a bond with 2 years to maturity,

Description

solution


Question

Michael buys a bond with 2 years to maturity, face value $500 and coupon rate 5%. At the time of purchase the yield is 8%. After 1 year he sells the bond to April when yields are 5%.;? What price does April pay for the bond?;? What is Michael?s rate of return?;? What is the current yield and rate of capital gain at the time Michael sells?;? If April holds the bond until maturity what rate of return does she get?;? What would Michael?s rate of return be if the bond had 3 years to maturity?

 

Paper#21502 | Written in 18-Jul-2015

Price : $22
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