As a sell - side analyst you are following a bond. A client asks you to value a corporate bond with 10 annua coupon payments of £85. The face value of this bond, £1500, will be repaid by the Corporation at the end of 10 years. You are asked to put a value on a bond which promises 10 annual coupon payments of £85 and will repay its face value of £1500 at the end of 10 years. As part of your market research, you discover bonds of similar class with yield to maturity of 11%. a. Using the above information, calculate the worth of the bond. b. If the Corporation offers you a price of £1545.70 for the bond, calculate its yield to maturity.

As a sell - side analyst you are following a bond. A client asks you to value a corporate bond with 10 annua coupon payments of £85. The face value of this bond, £1500, will be repaid by the Corporation at the end of 10 years. You are asked to put a value on a bond which promises 10 annual coupon payments of £85 and will repay its face value of £1500 at the end of 10 years. As part of your market research, you discover bonds of similar class with yield to maturity of 11%. a. Using the above information, calculate the worth of the bond. b. If the Corporation offers you a price of £1545.70 for the bond, calculate its yield to maturity.

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter6: Fixed-income Securities: Characteristics And Valuation

Section: Chapter Questions

Problem 4P

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