Suppose we have a bond with remaining cash flows of: $3 in exactly 6-months ...
70.2K
Verified Solution
Link Copied!
Question
Finance
Suppose we have a bond with remaining cash flows of:
$3 in exactly 6-months
$3 in exactly 12-months
$103 in exactly 18-months
The bond is trading at $99.01 in the open market.
What is the bonds YTM (yield-to-maturity), continuously compounded?
(HINT: Backsolve for a single discount rate on all the cash flows, r, given the bond's remaining cash flows and price and make sure to use the exponential function to discount so that yield is continuously compounded)
Group of answer choices
4.53%
5.52%
6.59%
7.51%
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
