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An investor has a 12% bond that pays semi-annually with a par value of R1 000....

An investor has a 12% bond that pays semi-annually with a par value of R1 000. The bond has a market price of R1 200 and 20 years to maturity. What is the bond equivalent yield of the bond?

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Answer #1

Solution:-

Nper = 20 years * 2 = 40periods

Pmt =

Pmt = $60

Face Value = $1,000

Price(PV) = $1,200

To Calculate equivalent yield of the bond-

Annual equivalent yield of the bond = 4.86% * 2

Annual equivalent yield of the bond = 9.72%

If you have any query related to question then feel free to ask me in a comment.Thanks. Please rate.

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