A bond has 10 years until maturity, a coupon rate of 9%, and sells for $1,100. Interest is paid annually. (Assume a face value of $1,000.) If the bond has a yield to maturity of 9% 1 year from now, what will its price be at that time? Note: Do not round intermediate calculations. What will be the rate of return on the bond? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign. If the inflation rate during the year is 3%, what is the real rate of return on the bond? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.
A bond has 10 years until maturity, a coupon rate of 9%, and sells for $1,100. Interest is paid annually. (Assume a face value of $1,000.)
-
If the bond has a yield to maturity of 9% 1 year from now, what will its price be at that time?
Note: Do not round intermediate calculations.
-
What will be the
rate of return on the bond?Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.
-
If the inflation rate during the year is 3%, what is the real rate of return on the bond?
Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Negative amount should be indicated by a minus sign.
Bonds are issued by borrowers to attract capital from investors ready to extend a loan to them for a decided period. When you purchase a bond, you are making a loan to the issuer, which could be a corporate or government.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
