Suppose that the current market price of the bond in Problem 1 is 95. Calculate the resulting redemption yield.

A corporate bond with exactly five years left to maturity pays interest at 8% on its 100 face value. The bond pays two coupons per year. The currently quoted redemption yield on an identically rated ten-year bond is 10%. What price for the corporate bond would give it the same redemption yield?

Answer rating: 100% (QA)

To calculate the resulting redemption yield we need to determine the yield to maturity YTM of the bo... View the full answer