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Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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5. A 35-year bond was issued by the Republic of the Philippines with a coupon of 10% last January
1, 2011 with coupons paid every July 1 and January 1 of each year. An investor had purchased this
bond on January 1, 2021, when prevailing interest rates were at 8%. Assuming the investor plans to
sell this bond on January 1, 2025, what would be his yield to maturity (YTM)? During the period
that the investor held the bond, you forecast the prevailing interest rates will increase by 250 basis
points."
Transcribed Image Text:Types of Investment
5. A 35-year bond was issued by the Republic of the Philippines with a coupon of 10% last January
1, 2011 with coupons paid every July 1 and January 1 of each year. An investor had purchased this
bond on January 1, 2021, when prevailing interest rates were at 8%. Assuming the investor plans to
sell this bond on January 1, 2025, what would be his yield to maturity (YTM)? During the period
that the investor held the bond, you forecast the prevailing interest rates will increase by 250 basis
points.
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