Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. three years ago, you bought a 12% bond that had 7

Three years ago, you bought a 12% bond that had 7 years to maturity and a...

60.1K

Verified Solution

Question

Finance

Three years ago, you bought a 12% bond that had 7 years tomaturity and a yield to maturity of 12%. Today (after the sixthinterest payment), you sold the bond when it is yielding 13%. Whatis your annual rate of return for the three year period? All couponpayments are semi-annual, and the par value is $1,000.

Answer & Explanation Solved by verified expert
3.9 Ratings (331 Votes)
Par Value 1000 Annual Coupon Rate 12 Semiannual Coupon Rate 6 Semiannual Coupon 6 1000 Semiannual Coupon 60 At the time of purchase Time to Maturity 7 years    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

Three years ago, you bought a 12% bond that had 7 years tomaturity and a yield to maturity of 12%. Today (after the sixthinterest payment), you sold the bond when it is yielding 13%. Whatis your annual rate of return for the three year period? All couponpayments are semi-annual, and the par value is $1,000.

Other questions asked by students

Statistics
1.2K views

how is the interpretation of slopes in multiple regression model different from simple regression slope? How repeated...

Biology
1.2K views

Lamarck, in part, based his erroneous theory of evolution on the passing of acquired characteristics from...

Physics
1.2K views

A 2100 kg truck is driving south through an intersection at 40 mph when it crashes...

Mechanical Engineering
1.2K views

Estimate the value of the acentric factor, w , for nitrogen, using tabular vapor pressure and critical...

Physics
1.2K views

The ends of metal rod are maintained at temperature 120 C and 150 C The...

Calculus
1.2K views

now that T S 0 sin x 1 cos x dx FIN 2 Justify your...

Accounting
1.2K views

[The following information applies to the questions displayed below.) Stark company has the following adjusted...

Accounting
1.2K views

Assume Vandell, a individual taxpayer, is in a 25 percent tax bracket. He invests in...

Accounting
1.2K views

Un ciudadano difunto falleci en 2020 con los siguientes datos: Filipinas Alemania Patrimonio bruto P14,200,000...

Accounting
1.2K views

Kentuckyville Slugger (KS) is a manufacturer of baseball and softball accessories. The company was established...

Accounting
1.2K views

Calculating and Reporting Income Tax Expense Lynch Company began operations in 2016. The company reported...

Finance
1.2K views

You are considering starting a walk-in clinic. Your financial projections for the first year of...