You bought a ten-year zero-coupon bond at a 4% YTM. You intend to sell it in one year. How much must the market yield go up or down so that you break even? Indicate BOTH the new yield AND whether it goes up or down. Assume semiannual compounding.

Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter4: Bond Valuation
Section: Chapter Questions
Problem 8MC: Suppose a 10-year, 10% semiannual coupon bond with a par value of 1,000 is currently selling for...
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You bought a ten-year zero-coupon bond at a 4% YTM. You intend to sell it in one
year. How much must the market yield go up or down so that you break even?
Indicate BOTH the new yield AND whether it goes up or down. Assume
semiannual compounding.
PRENOS
Transcribed Image Text:You bought a ten-year zero-coupon bond at a 4% YTM. You intend to sell it in one year. How much must the market yield go up or down so that you break even? Indicate BOTH the new yield AND whether it goes up or down. Assume semiannual compounding. PRENOS
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