100038050_HW4

# 100038050_HW4 - Current yeild YTM effective annual yeild...

This preview shows pages 1–4. Sign up to view the full content.

Problem 10 Miryang: premium bond, 8% coupon, semiannual payments, YTM of 6%, 13 years to maturity Yeosu: discount bond, semiannual payments, 6% coupon, YTM of 8%, 13 years to maturity Interest rates remain unchanged. Price in 1, 3, 8, 12, 13 years from now Solution Miryang: Price of the bond today: P0 = \$1,178.77 Price of the bond one year from now: P1 = \$1,141.12 Price of the bond three years from now P3 = \$1,148.77 Price of the bond eight years from now P8 = \$1,085.30 Price of the bond 12 years from now P12 = \$1,019.13 Price of the bond 13 years from now P13 = \$1,000.00 Yeisu: Price of the bond today: P0 = \$840.17 Price of the bond one year from now: P1 = \$847.53 Price of the bond three years from now P3 = \$864.10 Price of the bond eight years from now P8 = \$918.89 Price of the bond 12 years from now P12 = \$981.14 Price of the bond 13 years from now P13 = \$1,000.00 Problem 11 8.4% coupon bonds, 9 years to maturity, semiannual payments, sell for 104% of par

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Current yeild, YTM, effective annual yeild? Solution \$1,040.00 = 0.084 * 1,000/2 [(1 - 1/(1 + y/2)^18)/y/2] + 1 T T R R C R C R C PV ) 1 ( 000 , 1 ) 1 ( ... ) 1 ( 1 2 + + + + + + + + = \$- \$200.00 \$400.00 \$600.00 \$800.00 \$1,000.00 \$1,200.00 \$1,400.00 Tim Bond Price T T R C PV 000 , 1 ) 1 ( 1 1 + +-= PV = \$1,040 for YTM = 3.887% (semiannua Current yeild = 84/1040 = 8.08% Effective annual yeild = (1 + Periodic interest payment)^k -Problem 12 8% coupon bonds, price \$1,095, semiannual payments, mature in 20 years Coupon rate to sell at par ? \$1,095 = 0.08 * 1,000/2 [(1 - 1/(1 + y/2)^40)/y/2] + 1,000/(1+y/2)^40 PV = \$1,095 for YTM = 7.103% To sell at par the coupon rate should be the same as the yeild to maturity that is 7.103% T R R ) 1 ( + 1,000/(1+y/2)^18 Bonds Miryang: Yeisu: ime to Maturity al) and 7.774% annual- 1 = (1.03887)^2 - 1 = 7.925%...
View Full Document

{[ snackBarMessage ]}

### Page1 / 4

100038050_HW4 - Current yeild YTM effective annual yeild...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online