1. We buy a 20 year, 7% bond when rates are 10% and sell it when they are 6% in 6 years. What is the price we sell it at and buy it at? Show Equations used and ALL work.
2. You put $2000 at age 20 into an IRA for future retirement. Your IRA invest in a portfolio of common stock on NASDAQ. How much will you have at age 60?
3. We have a 12%, 15 year bond, which sells for $900. If the firm has the right to call it back after 6 years at par plus half a year's coupon. Compute the YTM and the YTC. Which will the investor attain? Show Equations used and ALL work please.