A bond's market price is $1,175. It has a $1,000 par value, will mature in 8 years, and has a coupon interest rate of 11 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 16 years? What if it matures in 4 years?
A bond's market price is $1,175. It has a $1,000 par value, will mature in 8 years, and has a coupon interest rate of 11 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 16 years? What if it matures in 4 years?
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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(Yield to maturity) A bond's market price is
$1,175.
It has a
$1,000
par value, will mature in
8
years, and has a coupon interest rate of
11
percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in
16
years? What if it matures in
4
years?Question content area bottom
Part 1
a. The bond's yield to maturity if it matures in
8
years is
enter your response here%.
(Round to two decimal places.)Expert Solution
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