Question

17. (8 points) Jose purchased a euro bond, which has a par value of $1,000 yield to maturity of 2.80% with five years until maturity. The e years Jose sold the bond at a price of $1010. If he was able to ond at a price of S1010. If he was able to invest the annual coupon at a return of 2.50%, what is his total realized retum over the two years? wch has a par value of S1,000, a 3% coupon rate, and a with five years until maturity. The euro bond pays annual coupon. After two

Answer 1

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BOND - Microsoft Excel (Product Activation Failed) Add-Ins View - 2x Dr General File Home Insert Page Layout Formulas Data Review % Cut Calibri -11AA = = = Ea Copy Paste Format Painter B I U B- A Clipboard Font Wrap Text Merge & Center - . $ -% Number Σ AutoSum : A Fill Sort & 2 Clear Filter Editing Formatting as Table Styles Styles Find & Select Alignment Cells CR74 > CM CP Q CR CS CT CU CV CW cx CY CZ CN STEP 1 74 75 76 77 78 со PRICE OF THE BOND COUPON RATE PAR VALUE COUPON(S) YEARS YTM PRICE 3.00% 1000 30.00 79 6.50% 854.55 [=PV(CP79, CP78,-CP77,-CP76)] 80 81 82 STEP 2 30.00 2.50% 83 84 85 ANNUAL COUPON REINVESTMENT RATE HOLDING PERIOD FV OF COUPONS 60.75 [=FV(CP83, CP84,-CP82)] 86 87 STEP 3 AFTER 2 YEARS SALE PRICE 88 1010.00 89 90 STEP 4 PO P1 854.55 1070.75 [1010 + 60.75] 91 92 93 94 HEM Rea ANSWER TOTAL REALIZED RETURN 25.30% (=CP91/CP90-1] YIELD SPOT ferences Sheet2 AFN BANKING NOTE 51 53 CLEAN PRICE s10 BIDDING, UNDERWRITING EUAC AW LIFELP, IP, MRP, INFLATION WARRANT refund 54 55 56 0 BOJ 120% 0 1 DOER 9 * * O ENG 29-11-2019)