An OMR 100 bond with two years to maturity and an annual coupon of 9 per cent is available. (The next coupon is payable in one year.) a.       If the market requires a yield to maturity of 9 per cent for a bond of this risk class what will be its market price?  b. If the required yield to maturity on this type of bond changes to 10 per cent, what will the market price change to?

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Q: convexity

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A: 1. Bond holder will receive each year a coupon amount. That is coupon rate. Answer: 8%.

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A: Using The PV function in excel.

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A: This question require us to compute the yield to maturity from the details given.

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A: The annual amount of interest that the owner of the bond will receive is called coupon rate.