A 2-year bond with par value $1,000 making annual coupon payments of $106 is priced at $1,000. a. What is the yield to maturity

Question

3 years ago

7

A 2-year bond with par value $1,000 making annual coupon payments of $106 is priced at $1,000. a. What is the yield to maturity

of the bond? (Round your answer to 1 decimal place.) b. What will be the realized compound yield to maturity if the 1-year interest rate next year turns out to be (i) 10%, (ii) 12%, (iii) 14%? (Round your answers to 2 decimal places.)

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1 answer:

shutvik [7] · Answer 1 · 2022-03-05T11:34:33+03:00

shutvik [7]3 years ago

8 0

Answer:

Explanation:

Face value = 1000

market price = 1000

annual yield = 106

yield to maturity = (106/1000) x 100

= 10.6 % .