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Homework Answers
| Remaining maturity | YTM | Current price ($) |
| 2 | 2% | 1038.83 |
| 2 | 4% | 1000.00 |
| 3 | 4% | 1000.00 |
| 5 | 2% | 1094.27 |
| 5 | 6% | 915.75 |
coupon payment = 4% x 1000 = $ 40
Current price = 40/(1 + YTM) + .... + (40 + 1000)/(1 + YTM)n
n = remaining maturity
(or Use excel function PV(YTM,n,-40,-1000))
Current value decreases with increase in YTM and it increases with increase in remaining maturity.
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