A bond has a coupon rate of 6 percent and will repay its nominal value of $100

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A bond has a coupon rate of 6 percent and will repay its nominal value of $100 when it matures after four years. The bond will be purchased today for $103 ex-interest and held until maturity.


Required:
Calculate, to 0.01 percent, the yield to maturity for the bond based on today’s purchase price.

Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a...
Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...
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