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Victoria bond is a premium bond with 6% coupon. Houston bond is a 7% coupon bond Both bonds make annual payments and have a yield
Victoria bond is a premium bond with 6% coupon. Houston bond is a 7% coupon bond Both bonds make annual payments and have a yield to maturity (YTM) of 6%, and have 10 years till maturity a. Estimate their prices (Bond prices). b. Estimate their current yields c. If interest rates remain unchanged by next year, estimate their prices a year from now. d. Estimate their first year capital gain yields. Hint: CGY=(P1P0)/P0
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