You are given the following spot rates: s1 = 6%, s2 = 7%, s3 = 8%. Calculate the YTM for a 3 year bond that sells for the present value of its cash flows. The bond has 6% coupons that are paid annually and is redeemed for its $1,000 par value. Answer Choices: a) 7.12% b) 7.50% c) 7.76% d) 7.92%
You are given the following spot rates: s1 = 6%, s2 = 7%, s3 = 8%. Calculate the YTM for a 3 year bond that sells for the present value of its cash flows. The bond has 6% coupons that are paid annually and is redeemed for its $1,000 par value. Answer Choices: a) 7.12% b) 7.50% c) 7.76% d) 7.92%
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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You are given the following spot rates: s1 = 6%, s2 = 7%, s3 = 8%.
Calculate the YTM for a 3 year bond that sells for the present value of its cash flows. The bond has 6% coupons that are paid annually and is redeemed for its $1,000 par value.
Answer Choices:
a) 7.12%
b) 7.50%
c) 7.76%
d) 7.92%
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