HW3.doc - Name last 4 PSU ID HOMEWORK#30(25 points total...

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Name ___________________________________________ last 4 PSU ID ___________ HOMEWORK #30 (25 points total) Economics 351 online R 1) a) (15 points) Calculate the rate of return under the following scenario: You purchase a coupon bond with a coupon rate = 5.5% and a face value of $1,000 for $1,100. You hold the bond for one year, receive 1 coupon payment and sell the bond for $ 1,050. What is your rate of return? (please show all work) b) (15 points) List 4 reasons, two from the demand side and two from the supply side that could cause bond prices to fall like they did in part a. 2) (15 points) Price the price of a 5 year coupon bond with a face value of $1000, a coupon rate = 4% and a yield to maturity of 3%. Please show all work. 1
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3) (110 points total)
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  • Spring '16
  • Economics, 3%, $1000, $1,000, $1,100, $ 1,050

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