The Pennington Corporation issued a new series of bonds on January 1, 1979. The bonds were sold at par ($1,000), have a 12 percent coupon, and mature in 30 years, on December 31, 2008. Coupon payments are made semi-annually (on June 30 and December 31). What was the YTM of Pennington’s bonds on January 1, 1979? What was the price of the bond on January 1, 1984, 5 years later, if the level of interest rates had fallen to 10 percent? c. On July 1, 2002, Pennington’s bonds sold for $916.42. What was the YTM at that date?
The Pennington Corporation issued a new series of bonds on January 1, 1979. The bonds were sold at par ($1,000), have a 12 percent coupon, and mature in 30 years, on December 31, 2008. Coupon payments are made semi-annually (on June 30 and December 31). What was the YTM of Pennington’s bonds on January 1, 1979? What was the price of the bond on January 1, 1984, 5 years later, if the level of interest rates had fallen to 10 percent? c. On July 1, 2002, Pennington’s bonds sold for $916.42. What was the YTM at that date?
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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The Pennington Corporation issued a new series of bonds on January 1, 1979. The bonds were sold at par ($1,000), have a 12 percent coupon, and mature in 30 years, on December 31, 2008. Coupon payments are made semi-annually (on June 30 and December 31).
- What was the YTM of Pennington’s bonds on January 1, 1979?
- What was the price of the bond on January 1, 1984, 5 years later, if the level of interest rates had fallen to 10 percent? c. On July 1, 2002, Pennington’s bonds sold for $916.42. What was the YTM at that date?
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