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Yield to maturity The Salem Company bond currently sells for $507.30​, has a coupon interest rate...

Yield to maturity

The Salem Company bond currently sells for $507.30​, has a coupon interest rate of 6​% and a $1000 par​ value, pays interest annually​, and has 11 years to maturity.  

a. Calculate the yield to maturity on this bond.

b. Explain the relationship that exists between the coupon interest rate and yield to maturity and the par value and market value of a bond.

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Answer #2

ANSWER IN THE IMAGE ((YELLOW HIGHLIGHTED). FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE. THUMBS UP PLEASE.

1. 15.67%

2. When the Interest rate (Yield ) in the market increases than the Bond price decreases.

And

When the Interest rate (Yield ) in the market decreases than the Bond price increases.

There is an inverse relationship between change in market yield and change in bond price.

The bond with higher coupon rate has higher YTM.


answered by: anonymous
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