(Q. 11 IN B) WHAT IS THE YIELD TO MATURITY OF A BOND WITH THE FOLL...

13. - EXAM SOLUTION FUNDAMENTALS OF CORPORATE FINANCE, 4TH EDITION BREALEY 13. - EXAM SOLUTION FUNDAMENTALS OF CORPORATE FINANCE, 4TH EDITION BREALEY
EXAM SOLUTION FUNDAMENTALS OF CORPORATE FINANCE, 4TH EDITION BREALEY
13. (Q. 11 in B) What is the yield to maturity of a bond with the following characteristics? Coupon rate is 8% with semi-annual payments, current price is $960, three years until maturity. A) 4.7826%B) 5.4867% C) 9.5652% D) 9.7939% Solution C $960 = $40 x PVIFA(i,6) + $1,000 x (1+i)

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i = 4.7826% YTM = 2 x i = 9.5652%