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Bond has a face value of $1,000 currently trading at $1,022. The bond has a coupon rate of 5.5% paid semi-annually with 5 years left to maturity.
Yield to maturity (YTM) of a bond is the required
YTM calculation is a trial and error process, however, we can calculate YTM using a financial calculator as follows:
INT = PMT = coupon amount
FV = M = maturity value
PV = Price of the bond (input as a negative value)
N = number of periods
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Chapter 6 Solutions
CFIN (with MindTap Finance, 1 term (6 months) Printed Access Card) (MindTap Course List)
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- A company's bond with a face value of $1,000 currently sells for $1,056.17. The bond matures in 8 years. The discount rate for the bond is 9%. What is the coupon rate of the bond if coupons are paid semiannually?arrow_forwardTracer Manufacturers issued a 10-year bond six years ago. The bond’s maturity value is $1,000, and its coupon interest rate is 6 percent. Interest is paid semiannually. The bond matures in four years. If investors require a return equal to 5 percent to invest in similar bonds, what is the current market value of Tracer’s bond?arrow_forwardMadsen Motors’s bonds have 23 years remaining to maturity. Interestis paid annually, they have a $1,000 par value, the coupon interest rate is 9%, and the yieldto maturity is 11%. What is the bond’s current market price?arrow_forward
- EBK CONTEMPORARY FINANCIAL MANAGEMENTFinanceISBN:9781337514835Author:MOYERPublisher:CENGAGE LEARNING - CONSIGNMENTIntermediate Financial Management (MindTap Course...FinanceISBN:9781337395083Author:Eugene F. Brigham, Phillip R. DavesPublisher:Cengage Learning
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