NVAEducation

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Question No.143

Ahmad purchases a 10 year 8 coupon bond with the face value of-00143

Online Quiz This subjective question is related to the book/course vu bt301 Introduction to Biotechnology. It can also be found in vu bt301 Mid Term Solved Past Paper No. 1.

Question 1: Ahmad purchases a 10 year 8% coupon bond with the face value of $100. He wants to hold this bond for 1-year and then sells a 9-year bond after 1-year.
(i) If interest rate does not change then what will be the rate of return?
(ii) If interest rate falls to 6% then suppose price increases to $109.16. What will be the capital gain after the price rise?
(iii) After the price rise, what will be the one year holding period return?
Answer:
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