A debt obligation offers the following p Years from now cash fl 2,000

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
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A debt obligation offers the following payments:
Years from now
cash flow to investor
1
2,000
2
2,000
3
2,500
4
4,000
1. If the price of the debt obligation is $7,704. What
is the yield or internal rate of return offered by this
debt obligation ?
2. What is the effective annual yield if the
semiannual periodic interest rate is 4.3% ?
3. What is the yield to maturity of a bond ?
4. What is the yield to maturity calculated on a
bond-equivalent basis ?
Transcribed Image Text:A debt obligation offers the following payments: Years from now cash flow to investor 1 2,000 2 2,000 3 2,500 4 4,000 1. If the price of the debt obligation is $7,704. What is the yield or internal rate of return offered by this debt obligation ? 2. What is the effective annual yield if the semiannual periodic interest rate is 4.3% ? 3. What is the yield to maturity of a bond ? 4. What is the yield to maturity calculated on a bond-equivalent basis ?
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