Consider a 100-year bond with 20 coupon paid semi-annually, Financial Management

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Consider a 100-year bond with 20 coupon paid semi-annually

Consider a 100-year bond with 20% coupon paid semi-annually and a par value of $1,000. Suppose after one year, the required YTM is determined to be 1%.

Determine the semi-annual coupon amount.

Determine the PV of the coupon payments for the remaining 99 years.

Determine the PV of the par value.

Determine the price of the bond at that point (end of one year).

What is the percentage capital gain or loss on this bond at this point?

If the required YTM had fallen to 0.001% instead, what would have been the price of the bond? What would have been the percentage capital gain?

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Financial Management: Consider a 100-year bond with 20 coupon paid semi-annually

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Financial Management: Consider a 100-year bond with 20 coupon paid semi-annually

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