Question

Please help, I don't know how to solve this question: A one‐year discount bond has a...

Please help, I don't know how to solve this question:

A one‐year discount bond has a payout of $21,000.   If the price rises from$19,000 to $20,000, the yield to maturity ___ from ___ % to ___ %?

Kindly show me the step please. Thank you.

0 0
Add a comment Improve this question Transcribed image text
Answer #1

Yield to maturity = (payout - price)/ price × 100

Yield to maturity when the price is $19000 = (21000 - 19000) / 19000 × 100 = 10.52%

Yield to maturity when the price is $20000 = (21000 - 20000)/20000 × 100 = 5%

So, the yield to maturity decreases from 10.52% to 5%.

Add a comment
Know the answer?
Add Answer to:
Please help, I don't know how to solve this question: A one‐year discount bond has a...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions
  • A simple discount bond pays $20,000 in one year. Find the yield to maturity when the...

    A simple discount bond pays $20,000 in one year. Find the yield to maturity when the price of the bond is         i.   $18,000         ii. $19,000         iii. $20,000 What happens to the yield to maturity as the price of the bond increases?

  • A 13-year, 6 percent coupon bond pays interest semiannually. The bond has a face value of...

    A 13-year, 6 percent coupon bond pays interest semiannually. The bond has a face value of $1,000. What is the percentage change in the price of this bond if the market yield to maturity rises to 5.7 percent from the current rate of 5.5 percent? A) 1.97 percent increaseB) 1.79 percent increaseC) 1.79 percent decreaseD) 1.6 percent decreaseE) 1 percent decrease I need to solve it with this calcualter , please, ( Texas Instruments - BA II Plus) step by...

  • Hi , I need your help please. I don't know how to do this . I...

    Hi , I need your help please. I don't know how to do this . I posted this question before and some sweet person did all this work below but I don't really understand ( i also don't know if it's right)and he also did the GRAPH on paper .I Need the GRAPH on EXCEL PLEASE. If you kindly maybe type it so I can fill this chart that would be really great ( I just gotta show some work...

  • Hello, please help me to solve it step by step. I know correct answer posted on...

    Hello, please help me to solve it step by step. I know correct answer posted on the below. Thank you so much. Crane Company has the following items at year-end: Cash in bank $32000 Petty cash 250 Short-term paper with maturity of 2 months 5000 Postdated checks 1200 Crane should report cash and cash equivalents of Correct answer: $37250

  • A one-year discount bond issued by X has a payout of $1,250 and today's price is...

    A one-year discount bond issued by X has a payout of $1,250 and today's price is $1,189. A one-year discount bond issued by Y has a payout of $382 and today's price is $354. Then the bond issued by X has a ____ yield than the bond issued by Y, and this could be because X has a ____ default risk. Group of answer choices a) higher; lower b) lower; lower c) lower; higher d) higher; higher

  • Please help I know answer is 73.374 but I don't know how to get it. willy...

    Please help I know answer is 73.374 but I don't know how to get it. willy the one-period binomial option pricing model, what is the forward price of a one-year forward contract on the stock? Problem 14.6 Consider a share of nondividend-paying stock in a one-year binomial frame. work with annual price changes, with the current price of the stock being 110 OPTION PRICING IN BINOMIAL MODELS 55, and the price of the stock one year from now being either...

  • Homework help.. I don't understand how to solve this problem please show steps and box answer...

    Homework help.. I don't understand how to solve this problem please show steps and box answer please.. thank you for your help!! Question: If a nylon 6.6, having a number-average molar mass Mn = 3.395 kg mol-1, was produced by RA2 + RB2 step polymerization with H2O being the by-product, determine the percent conversion if 1.1 mole of RA2 and 1 mole of RB2 were used in the process.

  • Bond Returns: A 15-year, $1,000 par value bond has an 8.5% annual payment coupon. The bond currently sells for $925. Aft...

    Bond Returns: A 15-year, $1,000 par value bond has an 8.5% annual payment coupon. The bond currently sells for $925. After one year, assuming the the yield to maturity (discount rate) remains the same as previous, calculate the following returns between the two years: 1) Current yield 2) Capital gains yield 3) Total returns Hint: solve the rate (yield to maturity) for the 25-year bond. with the same yield to maturity, solve the price for the bond with shorter maturity....

  • 1. A one-year discount bond issued by X has a payout of $1,250 and today's price...

    1. A one-year discount bond issued by X has a payout of $1,250 and today's price is $1,189. A one-year discount bond issued by Y has a payout of $382 and today's price is $354. Then the bond issued by X has a ____ yield than the bond issued by Y, and this could be because X has a ____ default risk. Group of answer choices higher; lower lower; lower lower; higher higher; higher 2. Suppose that the tax advantage...

  • need Help! I don't even know where to start. if you could please show every step...

    need Help! I don't even know where to start. if you could please show every step and maybe explain why you did it. thank you! 2. Provide reagents and intermediates. OEt Ph Ph Ph

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT