Important information about bond's yield to maturity
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Bond Pricing
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1. A 30-year maturity bond with face value $1,000 makes annual coupon payments and has a coupon rate of 8 percent. What is the bond's yield to maturity if the bond is selling for
a. $900
b. $1,000
c. $1,100
2. Repeat the previous problem if the bond makes semiannual coupon payments.
Kindly, put in the formula that has been used to calculate the above.
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Solution Summary
Bond's yield to maturity is considered.
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1. A 30-year maturity bond with face value $1,000 makes annual coupon
payments and has a coupon rate of 8 percent. What is the bond's yield
to maturity if the bond is selling for
a. $900
b. $1,000
c. $1,100
a. N = 30
future value = 1000
annual payment = 1000*8% = 80
PV = -900
Then using a financial calculator, or EXCEL commend
"=RATE(30,80,-900,1000)"
we can compute ...
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