percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's vield 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
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(Yield to maturity) A bond's market price is $700. It has a $1,000 par value, will mature in 8 years, and has a coupon interest rate of 12
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. The bond's yield to maturity if it matures in 8 years is %. (Round to two decimal places.)
Transcribed Image Text:(Yield to maturity) A bond's market price is $700. It has a $1,000 par value, will mature in 8 years, and has a coupon interest rate of 12 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. The bond's yield to maturity if it matures in 8 years is %. (Round to two decimal places.)
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