A USD 1000 coupon bond has a coupon rate of 10%, a maturity of 4 years and
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Question:
A USD 1000 coupon bond has a coupon rate of 10%, a maturity of 4 years and a price of 960 USD.
Will the yield to maturity be above or below 10% and why? (2.5 points)
Calculate the present value of the bond when the interest rate is 12%. Should the yield to maturity be above or below 12% and why? (2.5 points)
Calculate the present value of the bond when the interest rate is 8%. Should the yield to maturity be above or below 8% and why? (2.5 points)
Calculate the bond's yield to maturity at the current price. (2.5 points)
Related Book For
Foundations of Financial Management
ISBN: 978-1259024979
10th Canadian edition
Authors: Stanley Block, Geoffrey Hirt, Bartley Danielsen, Doug Short, Michael Perretta
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