Question
Suppose a five-year face value of $1000 bond with a 9% coupon rate, and coupons are paid semi-annually. The yield to maturity of this bond
Suppose a five-year face value of $1000 bond with a 9% coupon rate, and coupons are paid semi-annually. The yield to maturity of this bond is 7% (APR with semi-annual compounding).
a) Is this bond trading at a discount, at par, or a premium? Explain.
b) If the bond's yield to maturity rises to 8% (APR with semi-annual compounding), what price will the bond trade for?
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Public Finance Lessons From The Past And Effects On The Future
Authors: Miguel-Angel Galindo Martin
1st Edition
1629481491, 978-1629481494
