Homework Answers
Answer: Price of Bond 1>Price of Bond 2, Price of Bond 2>Price of Bond 3
- Since all bonds sells at a discount, YTM>coupon rate. That is YTM>8%
- As the annual coupon decreases, bond price also drops.
- So Price of bond 1>Price of bond 2
- Here bond 2 and bond 3 have same coupon rate but different maturity.
- As the maturity increases, bond price drops.
- So Price of bond 2>Price of bond 3
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i think i should use the same n to calculate the yield but it is too...
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calculation
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