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Business, 05.11.2020 19:10 jfw0504

1) How much would an investor lose the first year if she purchased a 30-year zero-coupon bond with a $1,000 par value and a 10% yield to maturity, only to see market interest rates increase to 12% one year later? 2) Suppose you pay $9,600 for a $10,000 Treasury bill maturing in four months. What is the effective annual rate of return for this investment? This is not a TIPS bill, but inflation is 4.5%.
3) You purchased a 5-year annual interest coupon bond one year ago. Its coupon interest rate was 5% and its par value was $1,000. At the time you purchased the bond, the yield to maturity was 4%. If you sold the bond after receiving the first interest payment and the bond's yield to maturity had changed to 3%, your annual total rate of return on holding the bond for that year would have been approximately

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