Problemyield to maturitybonds have 5 yrs left to maturity, Ask an Expert

Finance

Problem:

Yield to Maturity

Bonds have 5 yrs left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 8%.

Requirement:

What is the yield at maturity at a current market price of $800 $1200? If a "fair" market interest rate for such bonds was 12 % (rd=12%); would you pay $800 for each bond? Why? Explain in detail.

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Basic Finance, Finance

Category:- Basic Finance
Reference No.:- M91146079

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