A 100 bond with two years to maturity and an annual coupon of 9 per cent is available (The next coupon is payable in one year ) a If the market requires a yield to maturity of 9 per cent for a bond of this risk class what will be its market price b If the market price is 98, what yield to maturity ...

A 100 bond with two years to maturity and an annual coupon of 9 per cent is

Question:

A £100 bond with two years to and an annual of 9 per cent is available. (The next is payable in one year.)
a. If the market requires a yield to of 9 per cent for a bond of this risk class what will be its market price?
b. If the market price is £98, what yield to does it offer?
c. If the required yield to on this type of bond changes to 7 per cent, what will the market price change to?
Coupon
A coupon or coupon payment is the annual interest rate paid on a bond, expressed as a percentage of the face value and paid from issue date until maturity. Coupons are usually referred to in terms of the coupon rate (the sum of coupons paid in a... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...