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Yield to maturity Each of the bonds shown in the following table pays interest annually. Bond Par- value- Coupon -interest rate -Years to maturity -Current
Yield to maturity Each of the bonds shown in the following table pays interest annually.
Bond Par- value- Coupon -interest rate -Years to maturity -Current value | ||||||
A $1,000- 9%- 8 -$ 820 | ||||||
B 1,000 -12 -16 -1,000 | ||||||
C 500 -12 -12 -560 | ||||||
D 1,000 -15- 10- 1,120 | ||||||
E 1,000- 5- 3- 900 | ||||||
a. Calculate the yield to maturity (YTM) for each 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.
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