A $1000 par value, two year bond iscurrently trading at $1030 and is callable at$1050 in one year. The bond promises topay 8% annual coupons. If the bond istrading for $1010 after one year, calculatethe five (5) different Yields on this bond.

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pay 8% annual coupons. If the bond is trading for $1010 after one year, calculate the five (5) different Yields on this bond.

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

A $1000 par value, two year bond is
currently trading at $1030 and is callable at
$1050 in one year. The bond promises to
pay 8% annual coupons. If the bond is
trading for $1010 after one year, calculate
the five (5) different Yields on this bond.

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