Question
Assume zero-coupon yields on default-free securities are as summarized in the following table: Maturity(Years 1 2 3 4 5 Zero-Coupon YTM 4.00% 4.30% 4.50% 4.70%
Assume zero-coupon yields on default-free securities are as summarized in the following table:
| Maturity(Years | 1 | 2 | 3 | 4 | 5 |
| Zero-Coupon YTM | 4.00% | 4.30% | 4.50% | 4.70% | 4.80% |
Consider a fiver-year, default-free bond with annual coupons of 5% and a face value of $1000. You can apply the law of one price.
1. What is the yield to maturity on this bond?
2. If the yield to maturity on this bond increased to 5.2%, what would be the new price?
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Your Money The Missing Manual
Authors: J.D. Roth
1st Edition
0596809409, 978-0596809409
