7-2 YIELD TO MATURITY AND FUTURE PRICE A bond has a $1,000 par value, 12 years tomaturity, and an 8% annual coupon and sells for $980.a. What is its yield to maturity (YTM)?HIDE ANSWERAnswer:8.27%b. Assume that the yield to maturity remains constant for the next three years. Whatwill the price be 3 years from today?HIDE ANSWERAnswer:$983.38

Par value = $1,000Coupon rate = 8%Years to maturity = 12 yearsBond price = $980

Answered: 7-2 YIELD TO MATURITY AND CE A bond has…

7-2 YIELD TO MATURITY AND CE A bond has a maturity, and an 8% annual coupon and sells for $980. a. What is its yield to maturity (YTM)? HIDE ANSWER Answer: 8.27%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Question

7-2 YIELD TO MATURITY AND FUTURE PRICE A bond has a $1,000 par value, 12 years to
maturity, and an 8% annual coupon and sells for $980.
a. What is its yield to maturity (YTM)?
HIDE ANSWER
Answer:
8.27%
b. Assume that the yield to maturity remains constant for the next three years. What
will the price be 3 years from today?
HIDE ANSWER
Answer:
$983.38

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