16. A coupon bond which pays interest of $40 annually, has a par value of $1,000,...

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Question

Answer 1

Answer #1

Correct Answer - 4 == As below , details explanation

A coupon bond which pays Interest $	40
Par Value $ -A	1000
Selling @ discount $-B	159.71
After discounted price(A-B)=C	840.29
YTM ( Yield to Maturity)	Coupon Payment +(Face Value - Market value )/ Number of years
	(Face Value + Market value)/2

	$40+(1000-840.29)/5
	(1000+840.29)/2
YTM ( Yield to Maturity)	71.942
YTM ( Yield to Maturity)	920.145
YTM ( Yield to Maturity)	8%

Answer 2

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