How much would you pay for a perpetual bond that pays an annual coupon of $50 per year and yields on competing instruments are 20%?
You would pay $ 250.
If competing yields are expected to change to 10%, what is the current yield on this same bond assuming that you paid $250?
The current yield is 20%.
If you sell this bond in exactly one year, having paid $250, and received exactly one coupon payment, what is your total return if competing yields are 10%?
Your total return is ______. (Round your response to two decimal places.) -- Please help with this answer.
Only answer TOTAL RETURN question and how to calculate this answer.