Question
1.) If bond price is P95,200 against its face value of P100,000, is it worth buying this bond? Assuming that the coupon rate is 4.2%
1.) If bond price is P95,200 against its face value of P100,000, is it worth buying this bond? Assuming that the coupon rate is 4.2% and the prevailing interest rate of alternative investment is 4.9% (risk-free rate). The bond is expected to mature one year from now with a default rate of 3%. What is the current yield? (note: your answer must me rounded of to two decimal places then write the % sign; for example: 1.13%)
2.) Based on question above, what is the yield to maturity (note: your answer must me rounded of to two decimal places then write the % sign; for example: 1.13%) what is the yield to maturity adjusted with default risk?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started