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biju10775
12.08.2019 •
Mathematics
Acoupon bond with a face value of $1200 that pays an annual coupon of $100 has a coupon rate equal to nothing%. (round your response to the nearest whole number) what is the approximate (closest whole number) yield to maturity on a coupon bond that matures one year from today, has a par value of $1010, pays an annual coupon of $70, and whose price today is $1019.50?
a. 6%
b. 4%
c. 5%
d. 8%
e. 7%
if the yield to maturity on a bond exceeds its coupon rate, the price of the bond will be
above
equal
below
its face value.
Solved
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Ответ:
5.93% rounded to 6%, below
Step-by-step explanation:
First step is understanding that you need to use a financial calculator. Using, for example, a BA II Plus Texas Instrument, press the number then press CPT at the top left corner of the calculator then either press:
N=maturity,
I/Y=yield to maturity,
PV=present value/price today
PMT=annual coupon
FV=future value/par value
Depending on the requirements of the question. For this question:
The "price today" is the present value of the bond which is $1019.50=PV
The par value is the amount paid back at the end of the period. This is the future value of the bond which is put in the calculator as "-$1010"=FV because it is a payment.
The annual coupon is the amount that is paid each year. It is put as "-$70"=PMT in the financial calculator.
The maturity date is the year the bond expires so if it says "one year from today", this is 1=N
Then, after following the sequence of inputs into the calculator, the missing number is the yield to maturity will be calculated by pressing CPT then I/Y. The answer should come out as 5.93%. This is the return that the company that received the bond expects to make during the period.
If the Yield to maturity on a bond exceeds its coupon rate, the price of the bond will be below its face value.
Ответ: