Question
Find the yield to maturity for each of the following bonds by first writing down the equation that the yield y solves and then solving
Find the yield to maturity for each of the following bonds by first writing down the equation that the yield y solves and then solving for y using algebra, a graphic calculator, or Excel.
(a) A bond with one year to maturity, face value $1,000, paying semi-annual coupons at a rate of 2%, whose price today is $1,010.
(b) A bond with ten years to maturity, face value $1,000, paying semi-annual coupons at a rate of 2%, whose price today is $985.
(c) A bond with nine months to maturity, face value $1,000, paying semi-annual coupons at a rate of 2%, whose price today is $1,005.
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