At the beginning of the year, you bought a $1,000 par value corporate bond with a 6 percent annual coupon rate and a 10-year maturity date. When you bought the bond, it had an expected yield to maturity of 8 percent. Today the bond sells for $1,060. a. What did you pay for the bond? b. If you sold the bond at the end of the year, what would be your one-period return on the investment?

EBK CONTEMPORARY FINANCIAL MANAGEMENT
14th Edition
ISBN:9781337514835
Author:MOYER
Publisher:MOYER
Chapter6: Fixed-income Securities: Characteristics And Valuation
Section: Chapter Questions
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At the beginning of the year, you bought a $1,000 par value corporate bond with a 6 percent annual coupon rate and a 10-year maturity date. When
you bought the bond, it had an expected yield to maturity of 8 percent. Today the bond sells for $1,060.

a. What did you pay for the bond?
b. If you sold the bond at the end of the year, what would be your one-period
return on the investment?

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