Bond A is a one-year zero-coupon bond with $1,000 face value and a market price of $925.
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- Bond A is a one-year zero-coupon bond with $1,000 face value and a market price of $925. Bond B is a two-year zero-coupon bond with $1,000 face value and a market price of $895. Bond C is a two-year bond that trades in the same market as Bonds A and B, has the same risks as these bonds and has a $1,000 face value, and an annual coupon payment of 5%. You will learn more about coupon bonds in the future. For now, the following table describes the size and timing of the cash flows for Bond C.
Time (yrs) | 0 | 1 | 2 |
Coupon payments |
| $50 | $50 |
Face Value |
|
| $1000 |
- What is the YTM of each bond?
Related Book For
Statistical Techniques in Business and Economics
ISBN: 978-0078020520
16th edition
Authors: Douglas Lind, William Marchal
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