Yield to maturity and coupon
[DOC File]Sample midterm
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A) capital gain yield. B) yield to maturity. C) current yield. D) coupon rate. 2. The coupon rate of a bond equals: A) its yield to maturity. B) coupon as a percentage of its face value. C) the maturity value. D) coupon as a percentage of its price. 3. The face value of a bond is received by the bondholder: A) at the time of purchase. B) annually.
[DOC File]Solutions to Chapter 1
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When the bond is selling at face value, its yield to maturity equals its coupon rate. This firm’s bonds are selling at a yield to maturity of 9.25%. So the coupon rate on the new bonds must be 9.25% if they are to sell at face value. 8. The bond pays a coupon of 7.125% which means annual interest is $71.25.
YIELD TO MATURITY
Currently, the bond sells at par. What is the yield to maturity? 30 PMT. 16 N. 1000 FV-1000 PV. CPT I/Y = 3% X 2 = 6%. Or, Since the current price is equal to the face value, then the coupon rate is equal to the YTM, i.e. 6%. 2. Wine and Roses, Inc. offers a 7 percent coupon bond with semiannual payments and a yield to maturity of 7.73 percent.
[DOC File]Quantitative Problems Chapter 10
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With PV $819, FV $1,000, PMT 0 and N 2, the yield to maturity on the two-year zero-coupon bonds is 10.5% for the two-year annuities, PV $1,712.52, PMT 0, FV $2,000 and N 2 gives a yield to maturity of 8.07%. The zero-coupon bonds are the better buy. 5. Consider the following cash flows. All market interest rates are 12%.
[DOC File]Bond Yields and Prices - UNF
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Maturity of the bond. Coupon payments. Current Yield to maturity (discount factor) Need to weight present value of cash flows from bond by time received. In order for a bond to be protected from the changes in interest rates after purchase, the price risk and coupon reinvestment must offset each other.
[DOC File]Soln Ch 13 Bond prices
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Its yield to maturity equals the coupon rate, 10%. If the first-year coupon is reinvested at an interest rate of r percent, then total proceeds at the end of the second year will be 100 (1 + r) + 1100. Therefore, realized compound yield to maturity will be a function of r as given in the following table:
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