Question

Question 3 O out of 2 points Suppose you purchase a $1,000 bond with a coupon rate of 8% matures in 5 years at par, and you plan to sell it at the end of 3 years at the prevailing market price. When you purchase the bond, your investment advisor predicts that similar bonds with 2 years to maturity yield at 6%. What is the expected yield to maturity on the bond? Selected Answer: 0. 11.89% Question 4 2 out of 2 points

Answer 1

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Geren ????????? face value (F) = $1000 Date :... rate of Coupon (84) 2 84. - So coupon (C) = 81. of $1000 =480 By the formula YTM = C+Ex 100 .... (1) non here - no no. of year for which yield is to be calculated ; P = market price of the bond 2 Again Given that for a semilar bond with 3 a year maturity yield is 6%. le yTM=6% for this Bond & n=2 using Equations (6) ? ? 64. = 80 + (1000 - PT ها فی ی ی ی ی ی (1000+P) solving equation (2) we get p = $1037.74 (Putting back this value in Egnu We get ytm = 80+ (1000-1037.34 Here In ی ی (100+1037.7 literes 1000 + 10 37.74 بیا 3 YTM = 6.6171% YTM = 6:6177/ 1 - Penal Answer - Penal Answer و