What is the yield to maturity of the bond

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A five-­-year, $5,000 bond with a 4.5% coupon rate and semiannual coupons is currently trading for a price of $4,876.

1. What is the yield to maturity of the bond?

2. If the yield to maturity suddenly increases to 6.5%, causing the bond price to change to $4,578.880, what is the percentage change in price of the bond?

3. If you expected interest rates to increase, what type of bond would you have preferred to purchase than the five-­-year, $5,000 bond with the 4.5% coupon rate and price of $4,876.

Reference no: EM131306335

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