a firm has just issued a bond that has a face value of $1,000, a coupon rate of 8 percent paid semi-annually, and matures in 8 years. the bonds were issued with a yield to maturity of 9%. assume that 4 years from now, the bond tradess to earn an effective annual yield to maturity of 10%. at what price should this bond be trading for at the beginning of year 5?
a firm has just issued a bond that has a face value of $1,000, a coupon rate of 8 percent paid semi-annually, and matures in 8 years. the bonds were issued with a yield to maturity of 9%. assume that 4 years from now, the bond tradess to earn an effective annual yield to maturity of 10%. at what price should this bond be trading for at the beginning of year 5?
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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