Question
A $1,000 face value coupon bond has a coupon rate of 10%, a maturity of 4 years, and a price of $960. a) Is the
A $1,000 face value coupon bond has a coupon rate of 10%, a maturity of 4 years, and a price of $960.
a) Is the yield to maturity going to be above or below 10% and why?
b) Calculate the present value of the bond when the interest rate is 12%. Should the yield to maturity be higher or lower than 12% and why?
c) Calculate the present value of the bond when the interest rate is 8%. Should the yield to maturity be higher or lower than 8% and why?
d) Calculate the yield to maturity of this bond at the current price.
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a Is the yield to maturity going to be above or below 10 and why The yield to maturity will be above ...
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Personal Finance
Authors: Thomas Garman, Raymond Forgue
12th edition
9781305176409, 1133595839, 1305176405, 978-1133595830
