How much would you pay for a perpetual bond that pays an annual coupon of $100...

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How much would you pay for a perpetual bond that pays an annual coupon of $100 per year and yields on competing You would pay s(Round your response to the nearest penny) competing yields are expected to change to 15%, what is the current yield on this same bond assuming that you paid are 20%? $500? The current yield is D1%. (Round your response to the nearestnteger) If you sell this bond in exacty one year, having paid $500, and received exacty one coupon payment, what s your one year, having pad S500 and received exactly one coupon payment, what is your total return if competing yelds are 15%? Your total return is Dr. ( Round your response to two decimal places)

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Answer 1

Answer #1

1) Price paid for bond-Annual Coupon/Yield 100 -500 0.20 2) Current yield-Annual Coupon/Price paid -500 100 3) Total return Annual coupon Price sold - Price paid Price pai«d ) × 100 100 + 1000 500 500 ) × 100 = 120%

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Answer 2

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