NE Croporation issued 10 year bonds three years ago at a coupon rate of 6.5% which...

Question

Question

NE Croporation issued 10 year bonds three years ago at a coupon rate of 6.5% which is paid semi-annually. If the bonds now se

Answer 1

Answer #1

Assuming face value to be $1000

Number of periods = 7 * 2 = 14

Coupon = (0.065 * 1000) / 2 = 32.5

Price = 91% of 1000 = 910

YTM = 8.22%

Keys to use in a financial calculator:

2nd I/Y 2

FV 1000

PV -910

PMT 32.5

N 14

CPT I/Y

Answer 2

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