An investor wants to know the YTM on 8-year, 7% bond selling for 88.95% of its par value before investing in it. What is the bond's YTM, using the approximation formula? Q.2 A 20-year, 10% coupon-interest rate bond has a $1,000 par value. The market rate of interest is 8%. Compute the market price of this bond. Assume that interest is paid annually. Q.3 I a bond selling at a discount or premium if the coupon interest rate is 14% and the market requires a return of 12%? How much are you willing to pay for this bond if it matures in 15 years? Q.4 A bond with 6 years left to maturity has a coupon rate of 9% and a par value of $1,000. How much will you be willing to pay for the bond if you require an annual rate of return of 12%? Q.5 A bond pays interest annually and sells for $835. It has six years left to maturity and a par value of $1,000. What is its coupon if its promised YTM is 12%?

Answer rating: 100% (QA)

Q1 To calculate the YTM using the approximation formula we need to use the following formula YTM Ann... View the full answer