Question

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

Answer 1

I Price paid for bond 2 1. Annual Coupon Yield 2 los 3500 0.20 rent yield Annual coupon brice paid 102 x 100 = 20% 2 SOD 3 Total return a Annud coupont Price sold - Price paid x 10 - price port - (10210 ) xova z 1207

I Price paid for bond 2 1. Annual Coupon Yield 2 los 3500 0.20 rent yield Annual coupon brice paid 102 x 100 = 20% 2 SOD 3 Total return a Annud coupont Price sold - Price paid x 10 - price port - (10210 ) xova z 1207