Why are bonds generally priced using semiannual compounding? Does it make much difference if you use annual compounding?
Answer to relevant QuestionsWhat’s the difference between current yield and yield to maturity? Between promised yield and realized yield? How does YTC differ from YTM? Assume that an investor comes to you looking for advice. She has $200,000 to invest and wants to put it all into bonds. a. If she considers herself a fairly aggressive investor who is willing to take the risks necessary to ...You are evaluating an outstanding issue of $1,000 par value bonds with a 12% coupon rate that mature in 30 years and make quarterly interest payments. If the current market price for the bonds is $1,065, what is the quoted ...Using annual compounding, find the yield to maturity for each of the following bonds. a. A 9.5%, 20-year bond priced at $957.43 b. A 16%, 15-year bond priced at $1,684.76 c. A 5.5%, 18-year bond priced at $510.65 Now assume ...A $1,000 par value bond has a current price of $800 and a maturity value of $1,000 and matures in 5 years. If interest is paid semiannually and the bond is priced to yield 8%, what is the bond’s annual coupon rate?
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