Q1. Consider the following par

Q1. Consider the following par bond (ie coupon rate=yield): Year: 10 and 20 years . Yld 1.50% and 2.0%

Q1a. based on linear interpolation, what is the expected yield for a 20 year bond ONE year later, assuming yield curve shape stays the same? (3 pts)

Q1b. how much should the 20y bond be priced 1 year later (as a 19 year bond)? (3 pts)

Q1c. if you hold the 20Y for 1 year, what is your total return from the investment assuming yld curve does not change? (4 pts) Hint: your total return comes from coupon collection as well as price appreciation or depreciation.

Place this order or similar order and get an amazing discount. USE Discount code “GET20” for 20% discount

Posted in Uncategorized