Question

1. Castor owns one bond A and one bond B. The total value of these two bonds is 2,593.9 dollars. Bond A pays semi-annual coupons, matures in 14 years, has a face value of 1,000 dollars, and pays its next coupon in 6 months. Bond B pays annual coupons, matures in 15 years, has a face value of 1,000 dollars, has a yield-to-maturity of 4.98 percent, and pays its next coupon in one year. Both bonds have a coupon rate of 9.62 percent. What is the yield-to-maturity for bond A? Answer as a rate in decimal format so that 12.34% would be entered as .1234 and 0.98% would be entered as .0098.

Answer #1

**Yield to Maturity of Bond A = 8.26% or
0.0826**

HW9 #7)
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