A semi-annual bond has the following characteristics: Face value = Ksh 1,000 Coupon rate = 10%...

Question

Question

A semi-annual bond has the following characteristics:

Face value = Ksh 1,000

Coupon rate = 10% per annum

Time remaining till maturity = 15 years

Bond price = Ksh 880

Required:

Answer 1

Answer #1

i.

This bond is trading at discount to par value

ii.

Calculating Yield to Maturity,

Using TVM Calculation,

I = [PV = -800, PMT = 50, FV = 1,000, N = 30]

I = 13.08%

Yield to Maturity = 13.08%

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Answer 2

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