1 sally purchased a bond that pays an annual coupon of 85, Ask an Expert

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1. Sally purchased a bond that pays an annual coupon of $85. The face value of the bond is $1000 and the current yield to maturity is 7%. She purchased the bond at $895. What is the bond's year to maturity (YTM)? Show all work.

2. One bond has a coupon rate of 5.8%, another a coupon rate of 8.4%.Bth bonds pay interest annually, have 9year maturities, and sell at a yield to maturity of 7.0%.

a. If their yields to maturity nest year are still 7.0%, what is the rate of return on each bond?

b. Does the higher coupon bond give a higher rate of return over this period?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92744005

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