00:01
Given that you purchased a 5 year annual interest coupon 1 year ago, then coupon interest rate was 6 % and its value was $1000.
00:53
Then at the time you purchased the bond, the yield maturity was 4%.
01:05
Then if it gets sold after receiving the post interest payment, then the bond yield maturity had changed to 3%.
01:24
So we have to find the annual total rate of return on holding the bond.
01:34
Bond purchase price face value fv is equal to $1000.
01:51
Coupon rate is 6%.
01:58
Then number of compounding periods per year is 1.
02:15
Then interest per period is pmt is $60 .00.
02:33
Then number of years to maturity is 5.
02:45
Number of compounding periods to maturity nper is 5.
03:14
Then market rate of return by required rate of return which is 4 .00%.
03:46
Then market rate of return divided by rate of return per period rate is equal to 4 .00%.
04:24
So bond price is equal to pv nper pmt fv will be $1089 .04...