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please explain where the numbers 100, .6, and .4 come from. As well as 80 for part B. I understand how to do the math,

please explain where the numbers 100, .6, and .4 come from. As well as 80 for part B. I understand how to do the math, nit sure how to get these numbers however. image text in transcribed
Chapter 12 Short Answer Questions Example. a) What is the yield to maturity of a 10 percent coupon rate, 51000 par value bond which is currently priced at $1200 with 11 years to maturity? b) What would be the yield to call if the call can be made in 7 years at a price of S1025? Answer: part (a): S1000-S1200 $100+ ( 11 ) .6(S1200)+.4 (S1,000) Approximate yield to matu $100-18.18 S1,120 $81.82 7.31% $1120 If we use Financial Calculator for part(a) N=11, 1/YRO?, PV--1200, PMT-100, FV-1000, so I/YR-7.293 part (b): $1025 - $1200 $80+ (7) Approximate yield to call = 6($1.200)+4($1,025) $100-25 $1,130 $75 6.64% $1,130 If we use Financial Calculator for part(b) N-7, I/YR. PV-1200, PMT=100, FV-1025, so I/YR-6,629

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