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1. YTM A company has 7 percent coupon bonds on the market with 9 years left to maturity. Coupons are paid annually. If the bond currently sells for
(1) How many of coupon bonds would you need to issue to raise the whole amount? How many of zeroes would you need to issue?
(2) At maturity, what will your company's repayment be if you issue the coupon bond? What if you issue the zeroes?
6. Holding Period Return
You buy a 7% annual coupon bond for $875 today. The bond has 10 years till maturity.
A. What rate of return do you 'expect' to earn on your bond investment?
B. Two years from now, the YTM on your bond has declined by 1% due to credit rating improvement or market interest rate changes. If you decide to sell the bond, what price will your bond sell for? What is the holding period return on your investment? Compare this HPR with the YTM from part A.1. YTMA company has 7 percent coupon bonds on the market with 9 years left to maturity.Coupons are paid annually. If the bond currently sells for $1,038.50, what is its yield tomaturity? What if...