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(1 point) Determine the yield rate y2 for the following bond using the method of averages. State the result as a percent to 4

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Answer #1

Answer:y2= 9.99%

Given:

Face value = $4000

Redemption amount = 4000 * 98% = $3920

Time to maturity (in semiannual periods) = 8 * 2 = 16

Semiannual coupon = 4000 * 9% / 2 = $180

Purchase price = $3760

Hence:

Semiannual yield = RATE (nper, pmt, pv, fv, type) = RATE (16, 180, -3760, 3920, 0) = 4.968%

y2 = 4.968% * 2 = 9.94%

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