A $1,000 face value coupon bond has a coupon rate of 10%, a maturity of 4 years,

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A $1,000 face value coupon bond has a coupon rate of 10%, a maturity of 4 years, and a price of $960.

a) Is the yield to maturity going to be above or below 10% and why?

b) Calculate the present value of the bond when the interest rate is 12%. Should the yield to maturity be higher or lower than 12% and why?

c) Calculate the present value of the bond when the interest rate is 8%. Should the yield to maturity be higher or lower than 8% and why?

d) Calculate the yield to maturity of this bond at the current price.

Related Book For answer-question

Personal Finance

ISBN: 978-1133595830

12th edition

Authors: Thomas Garman, Raymond Forgue

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Posted Date: Mar 20, 2023 04:51 AM

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A $1,000 face value coupon bond has a coupon rate of 10%, a maturity of 4 years,

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a Is the yield to maturity going to be above or below 10 and why The yield to maturity will be above ... View the full answer

Personal Finance

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