Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. you bought a 25-year abc bond that has a coupon ra

You bought a 25-year ABC bond that has a coupon rate of 9 percent and sells...

50.1K

Verified Solution

Question

Finance

You bought a 25-year ABC bond that has a coupon rate of 9percent and sells at a yield to maturity of 8 percent. You holdthis bond for 1 year before selling.

a. If in one year the yield to maturity forthis bond is 10 percent, what is your rate of return?

b. What is your real rate of return if theinflation rate is 3%?

Answer & Explanation Solved by verified expert
4.2 Ratings (772 Votes)
face value 1000 Yield to maturityi 8 Coupon rate 9 Coupon Amount 10009 90 Years to maturity n 25 Bond price formula Coupon amount 1 11ini face    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

You bought a 25-year ABC bond that has a coupon rate of 9percent and sells at a yield to maturity of 8 percent. You holdthis bond for 1 year before selling.a. If in one year the yield to maturity forthis bond is 10 percent, what is your rate of return?b. What is your real rate of return if theinflation rate is 3%?

Other questions asked by students

Biology
1.2K views

The three forms of open neural tube defect are anencephaly, craniorachischisis and spina bifida. Explain the embryological origin...

Mechanical Engineering
1.2K views

A shell and tube type of heat exchanger with one shell pass and two tube passes...

Mechanical Engineering
1.2K views

An organic soil, the void ratio e is found to be 10.0 and GS is...

Economics
1.2K views

1. Many historians discussion a conservative rise during this period as some Americans focus on so-called...

Basic Math
1.2K views

Explain the Chi – Square test and when it is appropriate. Give example of such test.

Physics
1.2K views

equilibrium The mass of the container The system shown in figure is in the container...

Calculus
1.2K views

Solve the equation for x Use n as an integer constant cos r cos r...

Accounting
1.2K views

Account balences at the beginning of the year were: accounts receivable,...

Accounting
1.2K views

3 Exercise 14-6 Cost classification LO C3 1.66 points Tesla, a vehicle manufacturer,...

Accounting
1.2K views

Required information [The following information applies to the questions displayed below.) This year Jack intends...

Accounting
1.2K views

Research and development costs not included above were: Required: What was Ball's total research and...

Accounting
1.2K views

You purchase a meal from a food court restaurant in your local mall and notice...