Suppose you purchase a 30-year sek 10000 par value


Suppose you purchase a 30-year, SEK 10,000 par value, zero-coupon bond with a yield to maturity (YTM) of 4.4%. You hold the bond for 5 years before selling it.

(a) What is the price of the bond when you buy it?

The price of the bond iS .....

(b) If the bond’s yield to maturity drops by 1 percentage point when you sell it, what is the internal rate of return of your investment?

If YTM drops by one percentage point when you sell the bond, IRR is............ %. (round to one decimal)

(c) If the bond’s yield to maturity drops by 2 percentage points when you sell it, what is the internal rate of return of your investment?

If YTM drops by two percentage points when you sell the bond, IRR is............ %. (round to one decimal)

(d) If the bond’s yield to maturity increases by 1 percentage point when you sell it, what is the internal rate of return of your investment?

If YTM increases by one percentage point when you sell the bond, IRR is............... %. (round to one decimal)

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Financial Management: Suppose you purchase a 30-year sek 10000 par value
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