Question
Question: Bonds A and B are identical, including the risk class. The only difference between A and B is as shown below. Bond A FV:
Question:
Bonds A and B are identical, including the risk class. The only difference between A and B is as shown below.
Bond A
FV: 1000
Semi annual Coupon Value: $120
Years to maturity: 15
Price: $919.43
I had calculated that the YTM % is 13.25% for Bond A
Bond B
FV: 1000
Annual Coupon Value: $130
Years to maturity: 15
Price: ??
I used 13.25% as my YTM for Bond B, and came up with a price of $983.89. The correct answer is actually $957.02 and I can't figure out how to get to that answer. I don't have a finance calculator, so could someone explain to me the steps to arrive at the right answer?
Thanks!
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started