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Problem 9: You are interested in buying a bond that has a coupon rate of 9%, and matures in 25 years. The market rate for
Problem 9: You are interested in buying a bond that has a coupon rate of 9%, and matures in 25 years. The market rate for bonds with similar risk is 11.5%. What is the most you should pay for this bond? | Problem 10: Gwenyth just purchased a bond for $1250 that has a maturity of 10 years and a coupon interest rate of 8.5%, paid annually. What is the YTM of the $1000 face value bond that she purchased? | |||||||
NPER | 25 | NPER | 10 | |||||
RATE (Coupon) | 9.00% | RATE (Coupon) | 8.50% | |||||
PV (Coupon Price) | 1,000 | PV (Coupon Price) | 1,000 | |||||
PMT | 90 | PMT | 85 | |||||
RATE (Market Rate) | 12% | RATE (Market Rate) | ? | |||||
PV (Market Price) | ? | PV (Market Price) | 1,250 | |||||
FV | 1,000 | FV | 1,000 | |||||
Compounding Periods | Compounding Periods | 1 | ||||||
Compute ? | $1,000.00 | Compute ? | 5.23% | |||||
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