the following information to answer the questions. Bond A Bond B Face Value 1000 1000 Coupon rate 10% 8% Coupons paid out Semi-annually Quarterly Years to maturity 4 4 Bond price 800 ? Suppose bond A and B have the same YTM. What is the yield to maturity of bond A? What is the price of bond B? What is the current yield of bond B?
the following information to answer the questions. Bond A Bond B Face Value 1000 1000 Coupon rate 10% 8% Coupons paid out Semi-annually Quarterly Years to maturity 4 4 Bond price 800 ? Suppose bond A and B have the same YTM. What is the yield to maturity of bond A? What is the price of bond B? What is the current yield of bond B?
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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Question
Use the following information to answer the questions.
|
Bond A |
Bond B |
Face Value
|
1000 |
1000 |
Coupon rate
|
10%
|
8%
|
Coupons paid out
|
Semi-annually |
Quarterly |
Years to maturity
|
4 |
4 |
|
800 |
? |
Suppose bond A and B have the same YTM.
- What is the yield to maturity of bond A?
- What is the price of bond B?
- What is the current yield of bond B?
- What is the EAR (effective annual rate) of these two bonds?
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For Part 2, can that be calculated using excel?
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Can the price of bond B be determined using the PV function or any other function in excel? What is the EAR (effective annual rate) of these two bonds?
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