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    Yield To Maturity of the Bond

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    Each of the bonds shown in the following table pays interest annually.

    Bond A $1,000 Coupon interest rate 9% Years to maturity 8 Current Value $820
    Bond B $1,000 Coupon interest rate 12% Years to maturity 16 Current Value $1,000
    Bond C $500 Coupon interest rate 12% Years to maturity 12 Current Value $560
    Bond D $1,000 Coupon interest rate 15% Years to maturity 10 Current Value $1,120
    Bond E $1,000 Coupon interest rate 5% Years to maturity 3 Current Value $900

    a. Calculate the yield to maturity (YTM) for each bond.
    b. What relationship exists between the coupon interest rate and yield to maturity
    and the par value and market value of a bond? Explain.

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    https://brainmass.com/business/finance/yield-maturity-bond-599154

    Solution Preview

    Answer: Given that,

    (i) Bond Value $820
    Par value of Bond $1,000
    Coupon Rate 9%
    Time to maturity 8 years

    Yield to maturity 12.71%

    (ii) Bond Value $1,000
    Par value of ...

    Solution Summary

    This solution shows step-by-step calculations to determine the yield to maturity for the bond and what relationship exists between the coupon interest rate and yield to maturity.

    $2.19