Consider a five-year, default-free bond with annual coupons of 8% and a face value of $1,000 and assume zero-coupon yields on default-free securities are as summarized in the following table: Maturity Zero-Coupon Yields 1 year 7.00% 2 years 7.30% 3 years 7.50% 4 years 7.70% a. What is the yield to maturity on this bond? b. If the yield to maturity on this bond increased to 8.20%, what would the new price be? a. What is the yield to maturity on this bond? The yield to maturity on this bond is 7.75 %. (Round to three decimal places.) b. If the yield to maturity on this bond increased to 8.20%, what would the new price be? 5 years 7.80%

Consider a five-year, default-free bond with annual coupons of 8% and a face value of $1,000 and assume zero-coupon yields on default-free securities are as summarized in the following table: Maturity Zero-Coupon Yields 1 year 7.00% 2 years 7.30% 3 years 7.50% 4 years 7.70% a. What is the yield to maturity on this bond? b. If the yield to maturity on this bond increased to 8.20%, what would the new price be? a. What is the yield to maturity on this bond? The yield to maturity on this bond is 7.75 %. (Round to three decimal places.) b. If the yield to maturity on this bond increased to 8.20%, what would the new price be? 5 years 7.80%

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter12: Investing In Stocks And Bonds

Section: Chapter Questions

Problem 6FPE

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