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Its Jan 1st 2017 An investor has researched two possible bond investments, but an intermittent printer fault has caused some important information to be missing from the printout. The latest coupon on each bond has just been paid. Each bond has a face, or par, value of $1000. The investor assumes that each bond pays coupons annually

Bond Coupon rate Maturity                      Current Price   Yield to Maturity

ABC      6.50%          December 31 2022             ?                         5.50%

XYZ        4.45%         December 31 2024          $838.45                    ?

i. Complete the table by calculating the current price of bond ABC and yield to maturity of bond XYZ.

ii. The investor subsequently realises that the printer had not detailed the fact that the ABC bond makes semi-annual coupon payments. Recalculate the current price of the ABC bond.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92796756

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