A 4 % coupon has a maturity of two years and a yield to maturity of 6%. For the first year, interest rates stay at 6% and thereafter they change to 4%. Which of the following is closest to the realized yield on the bond at its final maturity?A. 5.95%B. 5.96%C. 6.22%
A 4 % coupon has a maturity of two years and a yield to maturity of 6%. For the first year, interest rates stay at 6% and thereafter they change to 4%. Which of the following is closest to the realized yield on the bond at its final maturity?A. 5.95%B. 5.96%C. 6.22%
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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A 4 % coupon has a maturity of two years and a yield to maturity of 6%. For the first year, interest rates stay at 6% and thereafter they change to 4%. Which of the following is closest to the realized yield on the bond at its final maturity?A. 5.95%B. 5.96%C. 6.22%
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