ROESTTON 21 Myriam is considering purchasing a 20-year bond that is selling for $983. The bond...

Question

Question

business finance

Answer 1

Answer #1

21: b

Using financial calculator
Input: FV= 103%*1000=1030 , N= 4*2 = 8 ; PV = -983 , PMT=4%*1000/2 = 20

Solve for I/Y as 2.58

Hence YTC = 2.58*2 = 5.16%

22: c

Since the coupons are now semiannual, the yield will now decrease due to greater frequency of payments.

Answer 2

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