Consider a fixed rate bond with notional N, coupon c, start date T0 and maturity 10 years which makes semi-annual coupon payments. This bond pays Nc/2 semi-annually and notional N at maturity. The price P of a bond is the present value of its cash flow. The yield to maturity (YTM) at T0 of this bond is the value of r such that

Question:

Company issued bonds with notional $100, maturity for 10 years, coupon 3.664%, and semi-annual coupon payments.

Suppose the YTM of the bond on the sixth year is 3.812%. What is the price of the bond today? Assume there are 10 coupon payments remaining.

Suppose the bond is currently trading at a price of $98.00. What is the YTM given this new price?

*() 9|N ( (1 + 1 2)2-1 (1+7/2)2i N (1+7/2)20) =1 *() 9|N ( (1 + 1 2)2-1 (1+7/2)2i N (1+7/2)20) =1