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    Calculating the price and YTM of the given bond

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    A three-year bond has 8.0% coupon rate and a face value of $1000.

    (A). If the yield to maturity on the bond is 10%, calculate the price of the bond assuming that the bond makes semi-annual coupon interest payments.

    (B). Assuming that this bond trades for $1,112, what is the YTM for this bond assuming that the bond makes semi-annual coupon interest payments? (Compute IRR).

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    Solution Preview

    Please refer attached file for better clarity of formulas in MS Excel.

    A)
    Coupon amount=PMT=1000*8%/2=$40 semi annual
    Number of coupon payments left=NPER=6 semi annual
    Required rate of return=RATE=10%/2=5% semi ...

    Solution Summary

    Solution describes the steps to calculate the price and YTM of the given bond with the help of formulas in MS Excel.

    $2.19

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