Coupon bond equation
[DOC File]CHAPTER 5
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Here we are finding the YTM of a semiannual coupon bond. The bond price equation is: P = $970 = $43(PVIFAR%,20) + $1,000(PVIFR%,20) Since we cannot solve the equation directly for R, using a spreadsheet, a financial calculator, or trial and error, we find: R = 4.531% . Since the coupon payments are semiannual, this is the semiannual interest rate.
[DOC File]University of Kansas
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From equation (4.10), the value of the FRA is therefore . or $2,078.85. Problem 4.16. A 10-year, 8% coupon bond currently sells for $90. A 10-year, 4% coupon bond currently sells for $80. What is the 10-year zero rate? (Hint: Consider taking a long position in two of the 4% coupon bonds and a short position in one of the 8% coupon bonds.)
[DOC File]Solutions to Questions and Problems
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Here we are finding the YTM of a semiannual coupon bond. The bond price equation is: P = $1,050 = $42(PVIFAR%,20) + $1,000(PVIFR%,20) Since we cannot solve the equation directly for R, using a spreadsheet, a financial calculator, or trial and error, we find: R = 3.837% . Since the coupon payments are semiannual, this is the semiannual interest ...
[DOC File]UNIT 6: VALUATION OF BONDS, PREFERENCE AND …
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When the required yield on a bond falls below its coupon rate, the bond sells at a premium. Current yield: The current yield relates the annual coupon interest to the market price. It is expressed as. Current yield = Annual Interest. Price. Ex. A Birr 1000 Bond issued at 12% at par for a period of ten years.
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