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Consider a 7% annual coupon bond with a face value of $1,200 that matures in 8 years. The yield to maturity is currently 8%. In
Consider a 7% annual coupon bond with a face value of $1,200 that matures in 8 years. The yield to maturity is currently 8%. In 5 years from today, the yield to maturity is expected to increase to 9%.
1) Calculate the price of the bond today and in 5 years.
2) Additionally, determine the yield to maturity of a 6% annual coupon bond with a $1,000 face value that matures in 12 years, if the current price of the bond is $950.
C = Coupon/interest payment
F = Face value P = Price n = Years to maturity
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