An investor buys a $1,000, 20-year 7 percent (interest paid annually) bond at par. After five years have passed, interest rates are 10 percent. How much did the investor lose on the purchase of the bond?
An investor buys a $1,000, 20-year 7 percent (interest paid annually) bond at par. After five years have passed, interest rates are 10 percent. How much did the investor lose on the purchase of the bond?
Chapter6: Bonds (debt) - Characteristics And Valuation
Section: Chapter Questions
Problem 4PROB
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An investor buys a $1,000, 20-year 7 percent (interest paid annually) bond at par. After five years have passed, interest rates are 10 percent. How much did the investor lose on the purchase of the bond?
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