Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decrease from 20 to 16 percent. a. What is the bond price at 20 percent? b. What is the bond price at 16 percent? c. What would be your percentage return on the investment if you bought when rates were 20 percent and sold when rates were 16 percent? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) My Questions | bart!...Table 10-1 Bond price tableYield toMaturity2964966%7%8%9%10%11%12%13%14%16%- 20%25%(10% Interest Payment, 20 Years to Maturity)PV ofPV ofCouponsPrincipal$1,635.141,359.031,146.991,059.40981.81912.85851.36796.33746.94702.48662.31592.88486.96395.39table_10-1.jpg (556x...++fi+++++$672.97456.39Time & Attendance:311.80258.42214.55178.43148.64124.03103.6786.7872.7651.3926.0811.53666|| || || || || || || || || || || || || ||Bond Price$2,308.111,815.421,458.801,317.821,196.361,091.291,000.00920.37850.61789.26735.07644.27513.04406.92

Price of the bond is the PV of annual coupons and par value discounted at the YTM.

Answered: a. What is the bond price at 20…

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Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

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Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 9FPE: Which of these two bonds offers the highest current yield? Which one has the highest yield to...

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Refer to Table 10-1, which is based on bonds paying 10 percent interest for 20 years. Assume interest rates in the market (yield to maturity) decrease from 20 to 16 percent.

a. What is the bond price at 20 percent?

b. What is the bond price at 16 percent?

c. What would be your percentage return on the investment if you bought when rates were 20 percent and sold when rates were 16 percent? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

My Questions | bart!...
Table 10-1 Bond price table
Yield to
Maturity
296
496
6%
7%
8%
9%
10%
11%
12%
13%
14%
16%
- 20%
25%
(10% Interest Payment, 20 Years to Maturity)
PV of
PV of
Coupons
Principal
$1,635.14
1,359.03
1,146.99
1,059.40
981.81
912.85
851.36
796.33
746.94
702.48
662.31
592.88
486.96
395.39
table_10-1.jpg (556x...
+
+
fi
+
+
+
+
+
$672.97
456.39
Time & Attendance:
311.80
258.42
214.55
178.43
148.64
124.03
103.67
86.78
72.76
51.39
26.08
11.53
666
|| || || || || || || || || || || || || ||
Bond Price
$2,308.11
1,815.42
1,458.80
1,317.82
1,196.36
1,091.29
1,000.00
920.37
850.61
789.26
735.07
644.27
513.04
406.92

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