Homework Answers
Coupon rate = 6%
Face value = $ 5,000
Price = 0.95 ×5000 = $ 4,750
We have to calculate the YTM.
Your MARR = 0.5% per month
![\large i_{eff} = [1 + 0.005]^{12} -1 = 0.061677](http://img.homeworklib.com/questions/cd2e9c90-af5c-11eb-8f58-a3d1d047d772.png?x-oss-process=image/resize,w_560)
MARR = 6.17% per year
Since the YTM is greater than the MARR. Hence, the bond is worth buying.
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