K = N |
Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k] + Par value/(1 + YTM)^N |
k=1 |
K =20 |
Bond Price =∑ [(5.5*1000/100)/(1 + 8/100)^k] + 1000/(1 + 8/100)^20 |
k=1 |
Bond Price = 754.55 |
thus purchase price = 754.55
K = N |
Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k] + Par value/(1 + YTM)^N |
k=1 |
K =19 |
Bond Price =∑ [(5.5*1000/100)/(1 + 6/100)^k] + 1000/(1 + 6/100)^19 |
k=1 |
Bond Price = 944.21 = selling price |
HPR = (selling price/purchase price-1)*100
=(944.21/754.55-1)*100=25.14%
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