A bond with annual interest payments based on a coupon rate of 9.25% and which matures...
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A bond with annual interest payments based on a coupon rate of 9.25% and which matures in 11 years is trading for a price of $885.00. Kerry is thinking about buying some of these bonds and has a yield to maturity requirement of 10.00%. The par value for the bond is $1,000. Would this bond's current market price make the bond attractive to Kerry? What is the Yield To Maturity (YTM") for these bonds at the $885.00 price? A bond with annual interest payments based on a coupon rate of 9.25% and which matures in 11 years is trading for a price of $885.00. Kerry is thinking about buying some of these bonds and has a yield to maturity requirement of 10.00%. The par value for the bond is $1,000. Would this bond's current market price make the bond attractive to Kerry? What is the Yield To Maturity (YTM") for these bonds at the $885.00 price?
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Answer rating: 100% (QA)
SOLUTION To determine if the bonds current market price is attractive to Kerry we need to compare it with Kerrys yield to maturity YTM requirement If the YTM of the bond is higher than Kerrys required ... View the full answer
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