Computation of yield to maturity and current market price

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Computation of yield to maturity and current market price of the bonds

Q1 Find the yield to maturity of a $1,000 par value bond with a 8% coupon maturing in 9 years selling for $901.40

( ) 9.69
( ) 8.2
( ) 10.1
( ) 10.5

Q2 Two firms (A and B) have $1,000 par value bond issues outstanding that have the same maturity (20 years) and risk. Firm A's bond has an 8% annual coupon rate, while Firm B's bond has an 8% semiannual coupon rate. If the nominal required rate of return, rd, is 12%, semiannual basis, for both bonds, what is the difference in current market prices of the two bonds?

( ) .50
( ) 2.20
( ) 17.53
( ) 6.28

Q3 You have just been offered a $1,000 par value bond for $847.88. The bond has an annual coupon rate of 8% and annual interest rates on equally risky new issues are 10%. You want to know how many more interest payments you will receive, but the party selling the bond cannot remember. Can you determine how many interest payments remain?

( ) 14
( ) 15
( ) 20
( ) 12

Reference no: EM139870

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