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A 4.5% semiannual coupon bond and face value of $1000 trades at $1200. It matures in...

A 4.5% semiannual coupon bond and face value of $1000 trades at $1200. It matures in 6 years. What is its yield to maturity (YTM)? Answer to the nearest hundreth of a percent.

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Answer #1

rate positively..

We have to use financial calculator to solve this
put in calculator
FV 1000
PV -1200
PMT 1000*4.5%/2 22.5
N 6*2 12
compute I 0.53%
YTM = .53%*2 1.05%
ans = 1.05%
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