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Kramer Enterprises issued 25 year bonds 7 years ago with a coupon rate of 8.2%. Currently, the bonds sell at a price of $925. Are
Kramer Enterprises issued 25 year bonds 7 years ago with a coupon rate of 8.2%. Currently, the bonds sell at a price of $925.
- Are these bonds discount, par value, or premium bonds? ______________________________
- Assuming semi-annual coupon payments, what is this bond's yield to maturity (YTM)?
- If the YTM were to increase by one percentage point, what would you expect to happen to the price of the bond?
- One year later the YTM increases by 1%, by what percentage would the price of the bond change as a result of this 1% increase in the YTM?
Kramer Enterprises issued 25 year bonds 7 years ago with a coupon rate of 8.2%. Currently, the bonds sell at a price of $925.
- Are these bonds discount, par value, or premium bonds? ______________________________
- Assuming semi-annual coupon payments, what is this bond's yield to maturity (YTM)?
- If the YTM were to increase by one percentage point, what would you expect to happen to the price of the bond?
- One year later the YTM increases by 1%, by what percentage would the price of the bond change as a result of this 1% increase in the YTM?
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The Meaningful Money Handbook
Authors: Pete Matthew
1st Edition
0857196510, 978-0857196514
