Question
Consider a five-year, default-free bond with annual coupons of 4 % and a face value of $ 1 , 0 0 0 and assume zero-coupon
Consider a five-year, default-free bond with annual coupons of 4% and a face value of $1,000 and assume zero-coupon yields on default-free securities are as summarized in the following table:
Maturity | 1 year | 2 years | 3 years | 4 years | 5 years |
Zero-Coupon Yields | 3.00% | 3.30% | 3.50% | 3.70% | 3.80% |
a. What is the yield to maturity on this bond?
b. If the yield to maturity on this bond increased to 4.20%, what would the new price be?
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Corporate Finance
Authors: Jonathan Berk, Peter DeMarzo
5th Edition
0134999460, 9780134999463
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