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The Disney Company

The Disney Company issues a $1,000 par value, 7.55% Coupon SEMIANNUAL bond with a maturity of 100 years. Immediately after purchase at par, suppose that all interest rates fall by 100 basis points. For the first two years (between time 0 and time 2), what is the holding period return (total return) on this bond? State your answer in annual rates. Compare your answer to the Effective Annual Rate of this bond.

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The Disney Company issues a $1,000 par value, 7.55% Coupon SEMIANNUAL bond with a maturity of 100 years. Immediately after purchase at par, suppose that all interest rates fall by 100 basis points. For the first two years (between time 0 and time 2), what is the holding period return (total return) on this bond? State your answer in annual rates. ...

Solution Summary

This solution is comprised of a detailed calculation to compute return and effective annual rate of the Disney Company bond.

$2.19