(a) What is the effective annual yield of a $1000 par value bond that pays semi-annual coupons,...
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Question:
(a) What is the effective annual yield of a $1000 par value bond that pays semi-annual coupons, has an annual coupon rate of 5% with a current trading price of $950 and a time to maturity of 10 years? What will happen to the value of the bond if the YTM falls by 1%%? Will it trade at a discount par or premium? (Round to the nearest percent).
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