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Suppose we have a bond with remaining cash flows of: $3 in exactly 6-months ...

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Finance

Suppose we have a bond with remaining cash flows of:

$3 in exactly 6-months

$3 in exactly 12-months

$103 in exactly 18-months

The bond is trading at $99.01 in the open market.

What is the bonds YTM (yield-to-maturity), continuously compounded?

(HINT: Backsolve for a single discount rate on all the cash flows, r, given the bond's remaining cash flows and price and make sure to use the exponential function to discount so that yield is continuously compounded)

Group of answer choices

4.53%

5.52%

6.59%

7.51%

Answer & Explanation Solved by verified expert
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