6. Yield to maturity Moe’s Inc. has bonds outstanding with a par value of $1000 and...
6. Yield to maturity Moe’s Inc. has bonds outstanding with a par value of $1000 and 10 years to maturity. These bonds pay a coupon of $45 every six months. Current market conditions are such that the bond sells for $938. Calculate the yield to maturity on the issue.
7. Duration A newly issued 5-year Altec Corp. bond has a price of $1,095.99, a par value of $1,000 and a 12% coupon rate. Find the duration of the bond.
Homework Answers
| Ans 6 | YTM | =((C+(FV-MV)/n)/(FV+MV)/2) | |||
| =((90+((1000-938)/10))/((1000+938)/2) | |||||
| 0.099278 | |||||
| 9.927761 | |||||
| Ans 7 | As duration is given in the question i.e 5 years | ||||
| Is there any different meaning ? | |||||
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