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Collingwood Homes has a bond issue outstanding that pays an 8 . 5 percent coupon and matures in 1 6 . 5 years. The bonds
Collingwood Homes has a bond issue outstanding that pays an percent coupon and matures in years. The bonds have a par value of $ and a market price of $ Interest is paid semiannually. What is the yield to maturity?
Use the Bond Valuation formula in Problem In this case since bond is a semiannual bond. Ccoupon amount to be divided by yield to maturity divided by and time period to be doubled.
Bond Value PV of coupons PV of par
Bond Value PV of annuity PV of lump sum
C Coupon amount Coupon rate X face value of bond $
Semiannual Bond Value
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C
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FV
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