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    two-year maturity bond

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    A two-year maturity bond with a face value of $1,000 makes annual coupon payments of $80 and is selling at face value. What will be the rate of return on the bond if its yield to maturity at the end of the year is (a) 6%,
    (b) 8%, (c) 10%.

    Solution

    Problem 4-22
    Instructions

    Use the assumptions below and the bond values to calculate the rate of return.

    Bond face value $1,000
    Annual coupon payment $80

    A two-year maturity bond with a face value of $1,000 makes annual coupon payments of $80 and is selling at
    face value. What will be the rate of return on the bond if its yield to maturity at the end of the year is (a) 6%,
    (b) 8%, (c) 10%.
    Rate of
    Yield to Maturity Value Return
    6% $1,018.87 FORMULA
    8% $1,000.00 FORMULA
    10% $981.82 FORMULA

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    https://brainmass.com/business/bond-valuation/114060

    Solution Summary

    The solution calculates the rate of return on a bond if the yield to maturity ends at the year.

    $2.19

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