Solve for the Yield using the following data: Frequency Semi If Held to Maturity Coupon 7% Cash Flow (coupon payment) Maturity 5 Discount Factor = 1/(1+YTM/2) Par Value $ 1,000 PV of CF = CF x DF Current Price $ 1,047 PV if held to Maturity $ Call Price $ 1,040 2 If Called Years til Call use =rate(...)* Yield to Maturity Yield to Call "don't forget to x2 Cash Flow (coupon payment) Discount Factor = 1/(1+YTC/2)* PV of CF = CF x DF PV if called $ 2 3 4 5 6 7 8 9 10 Note: in final period, you also get the Par Value ($1000) in 1 2 3 Note: in final period, you also get the Call Price ($1040) in addition to the Coupon.
Solve for the Yield using the following data: Frequency Semi If Held to Maturity Coupon 7% Cash Flow (coupon payment) Maturity 5 Discount Factor = 1/(1+YTM/2) Par Value $ 1,000 PV of CF = CF x DF Current Price $ 1,047 PV if held to Maturity $ Call Price $ 1,040 2 If Called Years til Call use =rate(...)* Yield to Maturity Yield to Call "don't forget to x2 Cash Flow (coupon payment) Discount Factor = 1/(1+YTC/2)* PV of CF = CF x DF PV if called $ 2 3 4 5 6 7 8 9 10 Note: in final period, you also get the Par Value ($1000) in 1 2 3 Note: in final period, you also get the Call Price ($1040) in addition to the Coupon.
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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Transcribed Image Text:Solve for the Yield using the following data:
Frequency
Semi
If Held to Maturity
1
2
3
4
5
6
7
8
9
10
Coupon
7%
Cash Flow (coupon payment)
Note: in final period, you also get the Par Value ($1000) in a
Maturity
5
Discount Factor = 1/(1+YTM/2)*
Call Price
Par Value
Current Price
Years til Call
sss
$
1,000
PV of CF CF x DF
$
1,047
PV if held to Maturity
$
$
1,040
2
If Called
1
2
3
4
use =rate(...)*
Yield to Maturity
Yield to Call
*don't forget to x2
Cash Flow (coupon payment)
Discount Factor = 1/(1+YTC/2)*
PV of CF CF x DF
PV if called
$
Note: in final period, you also get the Call Price ($1040) in addition to the Coupon.
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