subject
Business, 17.04.2021 15:30 nsuleban5016

A 30-year maturity bond has a 7.4% coupon rate, paid annually. It sells today for $879.92. A 20-year maturity bond has a 6.9% coupon rate, also paid annually. It sells today for $888.1. A bond market analyst forecasts that in five years, 25-year maturity bonds will sell at yields to maturity of 8.4% and 15-year maturity bonds will sell at yields of 7.9%. Because the yield curve is upward sloping, the analyst believes that coupons will be invested in short-term securities at a rate of 4.2%. a. Calculate the (annualized) expected rate of return of the 30-year bond over the 5-year period. (Round your answer to 2 decimal places.)
b. What is the (annualized) expected return of the 20-year bond? (Round your answer to 2 decimal places.)

ansver
Answers: 1

Another question on Business

question
Business, 22.06.2019 06:00
Why might a business based on a fad be a good idea? question 2 options: fads bring in the most customers. some fads are longer lasting than expected. fads have made some business owners incredibly wealthy. fads can take a business in a new direction.
Answers: 2
question
Business, 22.06.2019 11:10
Robert black, regional manager for ford in texas and oklahoma, faced a dilemma. the ford f-150 pickup truck was the best-selling pickup ever, yet ford's headquarters in detroit had decided to introduce a completely redesigned f-150. how could mr. black sell both trucks at the same time? he still had "old" f-150s in stock. in his advertising, mr. black referred to the new f-150s as follows: "not a better f-150. just the only truck good enough to be the next f-150." this statement represents ford's of the new f-150.
Answers: 2
question
Business, 22.06.2019 11:10
Post test question number 9 for entering the job market
Answers: 1
question
Business, 22.06.2019 11:10
Yowell company granted a sales discount of $360 to a customer when it collected the amount due on account. yowell uses the perpetual inventory system. which of the following answers reflects the effects on the financial statements of only the discount? assets = liab. + equity rev. βˆ’ exp. = net inc. cash flow a. (360 ) = na + (360 ) (360 ) βˆ’ na = (360 ) (360 ) oa b. na = (360 ) + 360 360 βˆ’ na = 360 na c. (360 ) = na + (360 ) (360 ) βˆ’ na = (360 ) na d. na = (360 ) + 360 360 βˆ’ na = 360 na
Answers: 1
You know the right answer?
A 30-year maturity bond has a 7.4% coupon rate, paid annually. It sells today for $879.92. A 20-year...
Questions
Questions on the website: 13722362