Assume that a bond has a face value of $250,000. It has a maturity of 1 year and the coupon rate of interest is 5%. If the current market price of this bond is $225,000, what is the yield to maturity? If the market price of the bond increases to $240,000, what happens to the yield to maturity?

Assume that a bond has a face value of $250,000. It has a maturity of 1 year and the coupon rate of interest is 5%. If the current market price of this bond is $225,000, what is the yield to maturity? If the market price of the bond increases to $240,000, what happens to the yield to maturity?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Assume that a bond has a face value of $250,000. It has a maturity of 1 year and the
coupon rate of interest is 5%. If the current market price of this bond is $225,000, what
is the yield to maturity? If the market price of the bond increases to $240,000, what
happens to the yield to maturity?

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