Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. there is a bond with fv = 1000, coupon rate of 10%

There is a bond with FV = 1000, coupon rate of 10% paid annually and 5...

70.2K

Verified Solution

Question

Finance

There is a bond with FV = 1000, coupon rate of 10% paid annuallyand 5 year maturity. At year 0, YTM = 8%.

Given constant YTM, what is the bond price at time 1?

What is capital gain yield and current yield?

What are the prices of the bond in year 2, 3, 4, and 5?

If at year 1, YTM becomes 12%, what is a bond price in year1?

Answer & Explanation Solved by verified expert
4.5 Ratings (938 Votes)
Calculation of Bond Price at time 1Price cash flowt 1 YTMtCash flow 1000 x 10 100YearCash flowPV Factor    See Answer
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Transcribed Image Text

There is a bond with FV = 1000, coupon rate of 10% paid annuallyand 5 year maturity. At year 0, YTM = 8%.Given constant YTM, what is the bond price at time 1?What is capital gain yield and current yield?What are the prices of the bond in year 2, 3, 4, and 5?If at year 1, YTM becomes 12%, what is a bond price in year1?

Other questions asked by students

Finance
1.2K views

Suppose Green Caterpillar Garden Supplies Inc. is evaluating a proposed capital budgeting project (project Alpha) that...

Advance Math
1.2K views

Produce an equivalent proposition without implications (">") and without not's ("-") using DeMorgan's Laws and the...

Biology
1.2K views

The Dynamic Crust The Continents The images below represent the changing locations of continents on...

Physics
1.2K views

ideal diatomic gas goes through a cycle consisting of two isochoric and two isobaric lines...

Basic Math
1.2K views

A gym charges a $615 yearly fee for membership plus $50 for each hour of...

Statistics
1.2K views

After a touchdown the kicker of a football team makes a one point conversion 90...

Algebra
1.2K views

Given the explicit definition t 2 5n find t a 7 b 93 c 1...

Accounting
1.2K views

3. What is cost behavior? Explain with the suitable example. How...

Accounting
1.2K views

QUESTION ONE William Limited has the following trial balance at 31st December 2017 ...

Accounting
1.2K views

City Taxi Service purchased a new auto to use as a taxi on January 1,...

Finance
1.2K views

can someome answer All 3 please!!!!!! Oriole, Inc, management...

Finance
1.2K views

why the portfolio is down more than the overall market