Just question 8. bond? b. Does the higher-coupon bond give a higher rate of returri UVLI...

Question

Question

Just question 8.
bond? b. Does the higher-coupon bond give a higher rate of returri UVLI LIM 8. Bond Pricing. A 6-year Circular File bond with

Answer 1

Answer #1

rate positively ..

Ans 8-a)
	Coupon rate = Annual coupon/ Par value
		80/1000
		8.00%


Ans 8-b)
	We have to use financial calculator to solve this
	put in calculator -

	PV	-950
	FV	1000
	PMT	80
	N	6

	Compute I	9.12%

	YTM =	9.12%

Ans 8-c)	Coupon rate should be 9.12%, at this rate bond will be issued at par

Answer 2

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