Question
Exercise 1 is provided for informational purposes only. My question is how to do Exercise 2. Exercise #1: Draw the timeline for a 6-year 5%
Exercise 1 is provided for informational purposes only. My question is how to do Exercise 2.
Exercise #1: Draw the timeline for a 6-year 5% annual coupon bond with a face value of $1,000 on Dec 31, 2020. Compute the price assuming the yield to maturity is:
A. ytm = 3% FV = 1000 PMT= 50 i= 3 n=6 Press PV P = $ 1,108.3438..
B. ytm = 7% FV = 1000 PMT= 50 i= 7 n=6 Press PV P = $ 904.66921..
Exercise #2: You buy the bond in Exercise #1B for 90.4669, hold it for one year, receive the coupon cash flow, and sell it for 95.7876. The realized yield on your investment is: .. %
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