CFIN
5th Edition
ISBN: 9781305661639
Author: Scott Besley, Eugene Brigham
Publisher: Cengage Learning
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Chapter 5, Problem 19PROB
Summary Introduction
Yield:
Yield is the return to be earned from an investment, if hold it for a specific period.
Yield includes payment of interest or dividend but does not include capital appreciation.
Calculate the yield as follows:
Given one year Treasury bond rate is 3.2%. Bond T matures in five years and yield is 5.3% and bond Q matures in 8 years and yield is 5.9%. Both bonds has same default risk and does not have liquidity premium.
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