bond

posted by .

Assume an investor with 5 years investment horizon is considering purchasing a 7 years 6% coupon selling at par. The investor expects to reinvest the coupon at 5% and that the bond will be selling to offer a yield to maturity of 4% in five years. What is the expect total return for this bond? Express your answer on a bond-equilent basis and on an effective annual rate basis.

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. Finance

    An investor purchases a 10-year U.S. government bond for $800. The bond's coupon rate is 10 percent and,?
  2. fin

    Which of the following statements is CORRECT?
  3. math

    Consider an 8% coupon bond selling for $953.10 with three years until maturity making annual coupon payments. The interest rates in the next three years will be, with certainty, r1 = 8%, r2 = 10%, and r3 = 12%. Calculate the yield …
  4. Finance

    Which of the following statements about the relationship between yield to maturity and bond prices is FALSE?
  5. Finance

    An investor in the 28% tax bracket is trying to decide which of two bonds to select: one is a 5.5% U.S. Treasury bond selling at par; the other is a municipal bond with a 4.25% coupon, which is also selling at par. Which of these two …
  6. Finance

    An investor in the 28 percent tax bracket is trying to decide which of two bonds to select: one is a 5.5 percent U. S. Treasury bond selling at par; the other is a municipal bond with a 4.25 percent coupon, which is also selling at …
  7. Finance

    .An investor in the 28 percent tax bracket is trying to decide which of two bonds to select: one is a 5.5 percent U. S. Treasury bond selling at par; the other is a municipal bond with a 4.25 percent coupon, which is also selling at …
  8. MCC

    An investor in the 28% tax bracket is trying to decide which of two bonds to select: one is a 6.5% U.S. Treasury Bond selling at par; the other is a municipal bond with a 5.25% coupon, which is selling at par. Which of these two bonds …
  9. finance

    1. A bond pays semiannual coupon payments of $30 each. It matures in 20 years and is selling for $1,200. What is the firm’s cost of debt if the bond’s par value is $1,000?
  10. Finance

    1. A bond pays semiannual coupon payments of $30 each. It matures in 20 years and is selling for $1,200. What is the firm’s cost of debt if the bond’s par value is $1,000?

More Similar Questions