3. Consider a two-year coupon bond with a face value of $1,000 and a coupon rate of 5%. Investor A bought the bond in January 2022 at its face value. The price declined to $950 in Jan 2023. Please answer the following questions: - Format requirement: Please type in a percentage for all questions, for example, 1%. For the second and the last question, please round the answer to 1 decimal place. For example, if your answer is 1.234 %, please type in 1.2%. 1. The market interest rate in January 2022 is 2. The market interest rate in January 2023 is 3. If Investor A holds the bond until maturity, the rate of return of her investment is
3. Consider a two-year coupon bond with a face value of $1,000 and a coupon rate of 5%. Investor A bought the bond in January 2022 at its face value. The price declined to $950 in Jan 2023. Please answer the following questions: - Format requirement: Please type in a percentage for all questions, for example, 1%. For the second and the last question, please round the answer to 1 decimal place. For example, if your answer is 1.234 %, please type in 1.2%. 1. The market interest rate in January 2022 is 2. The market interest rate in January 2023 is 3. If Investor A holds the bond until maturity, the rate of return of her investment is
Chapter8: Analysis Of Risk And Return
Section: Chapter Questions
Problem 9P
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Question
8
Transcribed Image Text:3. Consider a two-year coupon bond with a face value of $1,000 and a coupon rate of 5%. Investor A bought the
bond In January 2022 at its face value. The price declined to $950 in Jan 2023. Please answer the following
questions:
- Format requirement: Please type in a percentage for all questions, for example, 1%. For the second and the last
question, please round the answer to 1 decimal place. For example, if your answer is 1.234%, please type in 1.2%.
1. The market interest rate in January 2022 is
2. The market interest rate in January 2023 is
3. If Investor A holds the bond until maturity, the rate of return of her investment is
4. If Investor A sells the bond in Jan 2023 after redeeming a coupon, the rate of return of her investment is
5. If Investor A sells the bond to Investor B in Jan 2023 after redeeming a coupon, and Investor B holds the bond
until maturity, Investor B's rate of return is
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