Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Transcribed Image Text:As a sell - side analyst you are following a bond. A client asks you to value a corporate bond with 10 annual
coupon payments of £85. The face value of this bond, £1500, will be repaid by the Corporation at the end
of 10 years. You are asked to put a value on a bond which promises 10 annual coupon payments of £85
and will repay its face value of £1500 at the end of 10 years. As part of your market research, you discover
bonds of similar class with yield to maturity of 11 % . a. Using the above information, calculate the worth
of the bond. b. If the Corporation offers you a price of £1545.70 for the bond, calculate its yield to
maturity.
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