Unformatted text preview: . (b) An investor buys the above bond today . Immediately after the purchase , the market interest rate falls to 7 % and stays at that level until maturity . If the investor sells the bond three years after the initial purchase , estimate the Realized Yield . Assume that the coupons are being reinvested at the market rate . 3. Today is May 8 , 2011 . A $ 1 , 000 Face value Corporate bond with a coupon rate of 7 % makes semi-annual coupon payments on January 15 and July 15 of each year . The bond matures on July 15 , 2024 . How much would you pay for this bond today ? Assume that the market interest rate for this bond is 10 % ....
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This note was uploaded on 05/23/2011 for the course ECON 402 taught by Professor Kanner during the Spring '11 term at DePaul.
- Spring '11