Question

A 7.25 percent coupon bond with 24 years left to maturity is priced to offer a 6.5 percent yield to maturity. You believe that in one year, the yield to maturity will be 7.1 percent.

What would be the total return of the bond in dollars? (Assume interest payments are semiannual.) (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Total return ______

What would be the total return of the bond in percent? (Assume interest payments are semiannual.) (Negative answer should be indicated by a minus sign. Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Total return _______

Answer 1

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x V = praviti mardura 07:56 ENG 26 12 2019 5 - 6 x Share File Home Insert X Cut Copy. Page Layout formules Data Review View Calibri V AA = = = BTU A SEE Fort 5 Ho . DE BOND - Excel t ell me wiat you want to do Wrap Text General Merge & Center. 9 . % Conditional Format as Cell Formatting - Table- Styles Number Styles Autos Paste Insert Delete Format Autobam - AY O Sort & Find & Clear Filter - Select- Edeng Format Painter Clipboard - Alignment 0719 к N 748 749 7.25% 1000 72.5 750 751 752 753 COUPON FACE VALUE COUPON ($) YEARS PERIODS YTM PURCHASE PRICE 754 6.50% 1090.53 (=PV(M753/M752,M751*M752,-M750/M752,-M749) PO = PRICE AFTER 1 YEAR YEARS LEFT YTM SALE PRICE 23 7.1% 1016.88 (=PV(M758/M752,M757*M752,-M750/M752,-M749)] 755 756 757 758 759 760 761 762 763 764 PO P1 C1 YEARS TOTAL RETURN IN DOLLARS 1090.53 1016.88 72.5 765 ANS 1 -1.15 766 767 semi annual return ANNUAL RETURN -0.05% (=RATE(M764*M752,M763/2,-M761, M762)] -0.11% ANS 2 768 769 YIELD SPOL. Circular References Sheet2 AFN BANKING NOTE 51 53 CLEAN PRICE $10 BIDDING, UNDERWRITING EUAC AW LIFE LP, IP, MAP, INFLATION WARRANI refund S5 54 # !... F " 1909 -- -+