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If you buy the bond for 1000 ytm 6 hold it to maturity and

Consider a 2-year, risk-free bond with a coupon rate of 6% (annual coupons) and a face amount of $1,000.

a. What is price of this bond if the YTM is 5%? 6%? 7%?

b. If you buy the bond for $1,000 (YTM = 6%), hold it to maturity and you reinvest the coupon payment at 5%, what is the annual HPR on your investment?

c. If you buy the bond for $1,000 (YTM = 6%), then the yield increases to 7%, and you sell the bond immediately after the first coupon payment (in 1 year), what is your HPR?

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Business Management: If you buy the bond for 1000 ytm 6 hold it to maturity and

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