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b) A bond was issued on 1 July 2018. Below is the timeline of all cash flows payable by the bond until maturity. Cash flows $57 $57 $57 $57 $57 $57 $57 $1,057 1/07/18 1/07/19 1/07/20 1/07/21 1/07/22 1/07/23 1/07/24 1/07/25 1/07/26 Years Mat purchased the bond on 1 July 2021 at a price that gave him a yield to maturity of 5% p.a. effective. Using this information answer parts i), ii) and iii) below. () Without calculate the purchase price, can you tell if Mat bought the bond at a discount or at a premium? State your reason. ( Calculate the price Mat paid for the bond. (Round your answer to the nearest cent) iii) Mat plans to sell the bond on 1 July 2024 right after he gets the coupon. If Mat can sell the bond at a price of $1,032.06, calculate the total holding period return he can earn for this investment. (Round your answer to the nearest 0.01%) -

b) A bond was issued on 1 July 2018. Below is the timeline of all cash flows payable by the bond until maturity. Cash flows $57 $57 $57 $57 $57 $57 $57 $1,057 1/07/18 1/07/19 1/07/20 1/07/21 1/07/22 1/07/23 1/07/24 1/07/25 1/07/26 Years Mat purchased the bond on 1 July 2021 at a price that gave him a yield to maturity of 5% p.a. effective. Using this information answer parts i), ii) and iii) below. () Without calculate the purchase price, can you tell if Mat bought the bond at a discount or at a premium? State your reason. ( Calculate the price Mat paid for the bond. (Round your answer to the nearest cent) iii) Mat plans to sell the bond on 1 July 2024 right after he gets the coupon. If Mat can sell the bond at a price of $1,032.06, calculate the total holding period return he can earn for this investment. (Round your answer to the nearest 0.01%) -

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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b) A bond was issued on 1 July 2018. Below is the timeline of all cash flows payable by the bond until maturity. $57 $57 $57 $57 $57 $57 $57 $1,057 1/07/18 1/07/19 1/07/20 1/07/21 1/07/22 1/07/23 1/07/24 1/07/25 1/07/26 Cash flows Years Mat purchased the bond on 1 July 2021 at a price that gave him a yield to maturity of 5% p.a. effective. Using this information answer parts i), ii) and iii) below i) Without calculate the purchase price, can you tell if Mat bought the bond at discount or at a premium? State your reason. ( Calculate the price Mat paid for the bond. (Round your answer to the nearest cent) / iii) Mat plans to sell the bond on 1 July 2024 right after he gets the coupon. If Mat can sell the bond at a price of $1,032.06, calculate the total holding period return he can earn for this investment. (Round your answer to the nearest 0.01%)
Transcribed Image Text:b) A bond was issued on 1 July 2018. Below is the timeline of all cash flows payable by the bond until maturity. $57 $57 $57 $57 $57 $57 $57 $1,057 1/07/18 1/07/19 1/07/20 1/07/21 1/07/22 1/07/23 1/07/24 1/07/25 1/07/26 Cash flows Years Mat purchased the bond on 1 July 2021 at a price that gave him a yield to maturity of 5% p.a. effective. Using this information answer parts i), ii) and iii) below i) Without calculate the purchase price, can you tell if Mat bought the bond at discount or at a premium? State your reason. ( Calculate the price Mat paid for the bond. (Round your answer to the nearest cent) / iii) Mat plans to sell the bond on 1 July 2024 right after he gets the coupon. If Mat can sell the bond at a price of $1,032.06, calculate the total holding period return he can earn for this investment. (Round your answer to the nearest 0.01%)
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