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A 7.00 percent coupon bond with 25 years left to maturity is priced to offer a...

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Finance

A 7.00 percent coupon bond with 25 years left to maturity ispriced to offer a 5.6 percent yield to maturity. You believe thatin one year, the yield to maturity will be 6.1 percent.

What would be the total return of the bond in dollars? (Assumeinterest payments are semiannual.)

What would be the total return of the bond in percent? (Assumeinterest payments are semiannual.)

Answer & Explanation Solved by verified expert
4.4 Ratings (932 Votes)
Current Price of the Bond The Price of the is the Present Value of the Coupon Payments plus the Present Value of the face Value Face Value of the bond 1000 Semiannual Coupon Amount 35 1000 x 7 x Semiannual Yield to Maturity 280 560 c Maturity Period 50 Year 25 Years x 2 Price of the Bond Present Value of the Coupon Payments Present Value of    See Answer
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Transcribed Image Text

A 7.00 percent coupon bond with 25 years left to maturity ispriced to offer a 5.6 percent yield to maturity. You believe thatin one year, the yield to maturity will be 6.1 percent.What would be the total return of the bond in dollars? (Assumeinterest payments are semiannual.)What would be the total return of the bond in percent? (Assumeinterest payments are semiannual.)

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