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2. A $1,000 Omega Corp. bond has an 8% coupon rate that is paid semiannually. The bond matures in three years. If the current price

2. A $1,000 Omega Corp. bond has an 8% coupon rate that is paid semiannually. The bond matures in three years. If the current price of the bond is $1,125, what is the yield to maturity? Solution: FV = $1,000 PMT = = $40 N = 3 2 = 6 PV = $1,125 I/Y = 1.7846% (per semiannual period) YTM (must be annualized) = 1.7846% 2 = 3.57%

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