Exercise #6

Exercise #6 - ANSWER: Current yield = 0.092 = $100/P0; P0 =...

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1 Finance 355: Investments Instructor: Shuming Liu In-Class Exercise 6 Chapter 10 Question 19 LKD Co. has 10 percent coupon bonds with a YTM of 8.6 percent. The current yield on these bonds is 9.2 percent. How many years do these bonds have left until they mature? (Face value is $1,000 and coupons are paid semiannually.)
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Unformatted text preview: ANSWER: Current yield = 0.092 = $100/P0; P0 = $100/0.092 = $1,086.9565 Financial calculator: FV = 1,000, i = 8.6 / 2 = 4.3, PMT = 1,000 10% / 2 = 50, PV = (-)1,086.9565 N = 18.14 Number of years left to maturity: 18.14 / 2 = 9.07 years...
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