A two-year bond with par value $1,000 making annual coupon payments of $101 is priced at $1,000.

a. What is the yield to maturity of the bond? (Round your answer to 1 decimal place.)

Yield to maturity %

b. What will be the realized compound yield to maturity if the one-year interest rate next year turns out to be (a) 8.1%, (b) 10.1%, (c) 12.1%?(Do not round intermediate calculations.Round your answers to 2 decimal places.)

Interest Rate		Realized YTM
8.1	%	%
10.1	%	%
12.1	%	%

References

eBook & Resources