Question: WE HAVE A TWO - YEAR 1 0 % COUPON BOND; FACE VALUE OF $ 1 , 0 0 0 ; MARKET YIELD IS 1

WE HAVE A TWO-YEAR 10% COUPON BOND; FACE VALUE OF $1,000; MARKET YIELD IS 10%. IF THE MARKET YIELD REMAINS THE SAME, THE FUTURE VALUE OF THIS CASH FLOW WOULD BE $1,210, GENERATING AN ANNUAL YIELD OF 10%. SUPPOSE AFTER THE FIRST COUPON PAYMENT THE MARKET YIELD CHANGES TO:5%2.5%12.5%15% COMPUTE THE FUTURE VALUE OF EACH CASH FLOW AND THE RESULTING YIELD.

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