Feb 7 BUSI 408 - Quoted Rate VS. Effective Rate Present...

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Feb 7 Monday Coupon Bond=Annuity+Zero Coupon Bond Zero Coupon Bond: no coupon, but buying at a lower price Price=P/(1+r) Price, Yield, and CF: know 2 then can compute the third Yield to Maturity=IRR NPV=-C0+C1/(1+r) Solve r for NPV=0 (Zero Coupon Bond) Annualize interest rate
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Unformatted text preview: Quoted Rate VS. Effective Rate Present Value of Coupon Payment+Present Value of Principle Bond Price is Inversely Related to Yield Long Maturity Bonds are most sensitive to changes in yields Calculate Bond Price and Yield. Yield is just the IRR to make NPV=0...
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