YTM versus Bond Price Suppose Chinese Treasury department issued a 6-year bond with 4% coupon rate (p.a.), and its face value is 1,000 RMB. Three years later, now this bond is traded with 800 RMB, 700 RMB, or 1,100 RMB, respectively. (1) What is the yield to maturity of this bond in each case? (Hint: students are required to give details about the calculation based on lectures.) (2) What is the relationship between yield to maturity and bond price?

Answer rating: 100% (QA)

ANSWER To calculate the yield to maturity YTM of a bond we need to find the interest rate at which t... View the full answer