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Ch_07_Inclass_Exercise_Solutions_01

# Ch_07_Inclass_Exercise_Solutions_01 - Ch 07 Inclass...

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1 Ch 07 Inclass Exercises Solutions 1. Suppose you are looking at a bond that has a 10% annual coupon and a face value of \$1000. There are 20 years to maturity and the yield to maturity is 8%. What is the price of this bond? (1,196.36) Annual Coupon Bonds Find Current Price Coupon Rate 10.00% Years 20 Yield-to-Maturity (YTM) 8.00% Face Value 1,000 # of periods 20 Coupon Payment per period 100 Period rate 8.0000% APR 8.00% EAR 8.00% Current Price 1,196.36 2. Suppose you are looking a 7 year semiannual coupon bond with a coupon rate of 14% and priced to yield 16% to maturity. What is the price of this bond? (917.56) Semiannual Coupon Bonds Find Current Price Coupon Rate 14.00% Years 7 Yield-to-Maturity (YTM) 16.00% Face Value 1,000 # of periods 14 Coupon Payment per period 70 Period rate 8.0000% APR 16.00% EAR 16.64% Current Price 917.56

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2 3. Consider a bond with a 10% annual coupon rate, 15 years to maturity and a par value of \$1,000. The current price is \$928.09. What is the implied yield to maturity? (11%) Find Yield to Maturity (YTM) Current Price 928.09 Coupon Rate 10.00% Years 15 Face Value 1,000 # of periods 15 Coupon Payment per period
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Ch_07_Inclass_Exercise_Solutions_01 - Ch 07 Inclass...

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