Question
a.A coupon payment bond has a face value of $100 and sells at $94. The bond has a coupon rate of 7.5% and pays semi-annual
a.A coupon payment bond has a face value of $100 and sells at $94. The bond has a coupon rate of 7.5% and pays semi-annual coupons. The bond has a maturity of 30 years. What is the YTM?
b.What is the YTM if the same bond in a sells at $101?
c.What is the general relationship between bond price and market interest rate? (i.e. what does discount bond imply about market interest rate and coupon rate? What does premium bond imply about market interest rate and coupon rate?)
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Entrepreneurial Finance
Authors: J. Chris Leach, Ronald W. Melicher
6th edition
1305968352, 978-1337635653, 978-1305968356
