Question
suppose you have a standard coupon bond with a principal value of 50000 that matures in three years. the coupon rate is 4% and the
suppose you have a standard coupon bond with a principal value of 50000 that matures in three years. the coupon rate is 4% and the coupon is paid annually with the first payment due in 12 months from today? ("Standard" refers to a non-callable bond contract.) a) If the YTM is 3%, what is the price of the bond today? b) Suppose the price moves to $48,638.38. What is the new YTM? c) Now suppose the original bond from part a) pays coupon semi-annually instead of annually ($50K principal value, 4% coupon, matures in 3 years, 1st payment due in 6 mths). What is the price of the new bond?
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