Question
Consider a semiannual 8% coupon bond with a $1,000 face value that has 6 years to maturity. (a) Calculate the market price of this bond
Consider a semiannual 8% coupon bond with a $1,000 face value that has 6 years to maturity.
(a) Calculate the market price of this bond using a yield to maturity (YTM) of 7.2%. (2 marks)
(b) Is the bond in Part (a) a premium, par or discount bond? Explain why. (2 marks)
(c) Explain what is meant by the term YTM. (2 marks)
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Case Studies In Finance
Authors: Robert Bruner, Kenneth Eades, Michael Schill
6th Edition
0073382450, 978-0073382456
