Answered: 8. A bond is offered for sale for…

8. A bond is offered for sale for $1,120. Its face value is $1,000 and the interest is 11% payable annually. What yield to maturity will be received if the bond matures 10 years hence?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 11P

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Concept explainers

Treasury Market

On-the-run securities are the most recently issued securities in the market depth and are therefore traded at some premium. The off-the-run securities are the ones issued just before the most recent ones. The on-the-run securities have a lower yield to the investor than the off-the-run securities.

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8. A bond is offered for sale for $1,120. Its face value is $1,000 and the interest is 11% payable
annually. What yield to maturity will be received if the bond matures 10 years hence?

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