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An investor is interested in purchasing a new 20-year government bond carrying a 10 percent annual coupon rate with interest paid twice a year

An investor is interested in purchasing a new 20-year government bond carrying a 10 percent annual coupon rate with interest paid twice a year
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Solution Guide / Answer Key:

FINANCE

FIN 350 Module 2: Assignments

Chapter 6 Problems and Issues 4

4. An investor is interested in purchasing a new 20-year government bond carrying a 10 percent annual coupon rate with interest paid twice a year. The bond’s current market price is $875 for a $1,000 par value instrument. If the investor buys the bond at the going price and holds it to maturity, what will be his or her yield to maturity? Suppose the investor sells the bond at the end of 10 years for $950. What is the investor’s holding-period yield?

 

FILE: MS WORD

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