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Would like some help with this and some simple explanation if possible. My teacher does not do a great job at helping me understand. Instructions:
Would like some help with this and some simple explanation if possible. My teacher does not do a great job at helping me understand.
Instructions: 1) Solve for the Yield to Maturity (YTM) in cell C17. 2) Solve for the Yield to Maturity (YTC) in cell C18. 3) Use the YTM and YTC to calculate the Discount Factors in rows 10 and 16, respectively. 4) Apply the Discount Factor to the Cash Flow. 1 2 3 4 5 6 7 8 9 10 Note: in final period, you also get the Par Value ($1000) in addition to the Coupon. Solve for the Yield using the following data: Frequency Semi Coupon 8% Maturity 5 Par Value $ 1,000 Current Price $ 1,047 Call Price $ 1,040 Years til Call If Held to Maturity Cash Flow (coupon payment) Discount Factor = 1/(1+YTM) PV of CF PV if held to Maturity $ 1 2 3 4 Note: in final period, you also get the Call Price ($1040) in addition to the Coupon. use =rate(...)* Yield to Maturity Yield to Call *don't forget to x2 If Called Cash Flow (coupon payment) Discount Factor = 1/(1+YTC) PV of CF PV if called $Step by Step Solution
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