assume a bond has 5 years to maturity, a price of 1032, a coupon rate of...

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assume a bond has 5 years to maturity, a price of 1032, a couponrate of 6%, a par value of 1000, and 1 coupon payment per year.find the bonds yield to maturity. If the number of coupon paymentsper year was 4 instead of 1, what would be the bonds new yield tomaturity

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Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â K = N

Bond Price =âˆ‘ [(Annual Coupon)/(1 + YTM)^k]Â Â Â Â +Â Â Par value/(1 + YTM)^N

Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â k=1

Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â K =5

1032 =âˆ‘ [(6*1000/100)/(1 + YTM/100)^k]Â Â Â Â +Â Â 1000/(1 + YTM/100)^5

Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â k=1

YTM% = 5.26

Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â K = Nx4

Bond Price =âˆ‘ [(Quarterly Coupon)/(1 + YTM/4)^k]Â Â Â Â +Â Â Par value/(1 + YTM/4)^Nx4

Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â k=1

Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â K =5x4

1032 =âˆ‘ [(6*1000/400)/(1 + YTM/400)^k]Â Â Â Â +Â Â 1000/(1 + YTM/400)^5x4

Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â k=1

YTM% = 5.27

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assume a bond has 5 years to maturity, a price of 1032, a coupon rate of...

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Question

Finance

assume a bond has 5 years to maturity, a price of 1032, a couponrate of 6%, a par value of 1000, and 1 coupon payment per year.find the bonds yield to maturity. If the number of coupon paymentsper year was 4 instead of 1, what would be the bonds new yield tomaturity

Answer & Explanation Solved by verified expert

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