A two-year bond with par value $1,000 making annual coupon payments of $105 is priced at $1,000.Required:a. What is the yield to maturity of the bond? (Round your answer to 1 decimal place.)Yield to maturity%Interest Rate Realized YTM8.5%%10.5%%12.5%%421b. What will be the realized compound yield to maturity if the one-year interest rate next year turns out to be (a) 8.5%, (b) 10.5%, (c)12.5% ? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Yield to maturity is computed by following formula:-ytm = * 100whereytm = yield to maturityRV =…

A two-year bond with par value $1,000 making annual coupon payments of $105 is priced at $1,000. Required: a. What is the yield to maturity of the bond? (Round your answer to 1 decimal place.) Yield to maturity % Interest Rate Realized YTM 8.5% % 10.5% % 12.5% % 4 b. What will be the realized compound yield to maturity if the one-year interest rate next year turns out to be (a) 8.5%, (b) 10.5%, (c) 12.5% ? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

A two-year bond with par value $1,000 making annual coupon payments of $105 is priced at $1,000. Required: a. What is the yield to maturity of the bond? (Round your answer to 1 decimal place.) Yield to maturity % Interest Rate Realized YTM 8.5% % 10.5% % 12.5% % 4 b. What will be the realized compound yield to maturity if the one-year interest rate next year turns out to be (a) 8.5%, (b) 10.5%, (c) 12.5% ? (Do not round intermediate calculations. Round your answers to 2 decimal places.)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter4: Bond Valuation

Section: Chapter Questions

Problem 12P: Bond Yields and Rates of Return A 10-year, 12% semiannual coupon bond with a par value of 1,000 may...

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