You are asked to put a value on a bond which promises eight annual coupon payments of
Fantastic news! We've Found the answer you've been seeking!
Question:
You are asked to put a value on a bond which promises eight annual coupon payments of 50 and will repay its face value of 1000 at the end of eight years. You observe that other similar bonds have yields to maturity of 9 per cent.
i) How much is this bond worth? (2 marks)
ii) You are offered the bond for a price of 755.5. What yield to maturity does this represent? (3 marks)
Posted Date: