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3 November, 10:11

PBJ Corporation issued bonds on January 1, 2006. The bonds had a coupon rate of 5.5%, with interest paid semiannually. The face value of the bonds is $1,000 and the bonds mature on January 1, 2021. What is the yield to maturity for a PBJ Corporation bond on January 1, 2012 if the market price of the bond on that date is $950

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  1. 3 November, 13:14
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    Solution:

    Using financial calculator:

    Pmt = 55/2 = 27.5

    Pmt = 27.5

    Fv = 1000

    N = 9*2 = 18

    Pv = - 950

    Press cpt and I/Y

    I / Y = 6.23%
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