Question

Bond 1 Coupon rate 6% Annual coupon frequency 2 Par $1,000 Time to maturity (years) 10...

Bond 1

Coupon rate

6%

Annual coupon frequency

2

Par

$1,000

Time to maturity (years)

10

2. (10 points) Compute the following yields:

a) the yield to maturity for Bond 1, above, if the current bond price is $875.

b) the yield to call for Bond 1 if its current price is $1050 and it is callable in 4 years at a value of par plus one year’s coupon interest.

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Answer #1

a)

b)

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