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There is a bond with FV = 1000, coupon rate of 10% paid annually and 5...

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Finance

There is a bond with FV = 1000, coupon rate of 10% paid annuallyand 5 year maturity. At year 0, YTM = 8%.

Given constant YTM, what is the bond price at time 1?

What is capital gain yield and current yield?

What are the prices of the bond in year 2, 3, 4, and 5?

If at year 1, YTM becomes 12%, what is a bond price in year1?

Answer & Explanation Solved by verified expert
4.5 Ratings (938 Votes)
Calculation of Bond Price at time 1Price cash flowt 1 YTMtCash flow 1000 x 10 100YearCash flowPV Factor    See Answer
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Transcribed Image Text

There is a bond with FV = 1000, coupon rate of 10% paid annuallyand 5 year maturity. At year 0, YTM = 8%.Given constant YTM, what is the bond price at time 1?What is capital gain yield and current yield?What are the prices of the bond in year 2, 3, 4, and 5?If at year 1, YTM becomes 12%, what is a bond price in year1?

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