Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

How did they get the $46.00 for the CPN? Suppose a 10 -year, $1,000 bond with an 9.2% coupon rate and semiannual coupons is trading

How did they get the $46.00 for the CPN? image text in transcribed
Suppose a 10 -year, $1,000 bond with an 9.2% coupon rate and semiannual coupons is trading for $1,038.00. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 10.5% APR, what will be the bond's price? 10 Inna the Dona s yieia to maturity, you use tne tollowing equation: P=yCPN(1(1+y)n1)+(1+y)nFV where P is the bond's price, CPN is the coupon payment, y is the semiannual rate, FV is the face value, and n is the number of periods. You need to solve for y and multiply it by two to obtain the yiel maturity expressed as an APR with semi-annual compounding. Using the equation above to find the bond's yield to maturity: $1,038.00=y$46.00(1(1+y)201)+(1+y)20$1,000 v=0.04313

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Management Cost Accounting

Authors: Colin Drury, John Drury

4th Edition

1861522304, 9781861522306

More Books

Students also viewed these Accounting questions

Question

How may expected revenues in a service enterprise be computed?

Answered: 1 week ago

Question

can objects be passed as parameters by reference only? c + +

Answered: 1 week ago