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The bond shown in the following table pays interest annually. (Click on the icon here in order to copy the contents of the data
The bond shown in the following table pays interest annually. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet) Par value $100 Coupon Interest rate 14% Years to maturity 16 Current value $110 a. Calculate the yield to maturity (YTM) for the bond. b. What relationship exists between the coupon interest rate and yield to maturity and the par value and market value of a bond? Explain a. The yield to maturity (VTM) for the bood is (Round to two decimal places)
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SOLUTION a To calculate the yield to maturity YTM for the bond we need to use the following formula PV C1r C1r2 C1rn F1rn Where PV Present value of the bond Current value C Annual coupon payment r Yie...
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Fundamentals Of Investing
Authors: Scott B. Smart, Lawrence J. Gitman, Michael D. Joehnk
14th Edition
0135175216, 978-0135175217
