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8 December, 01:13

Alice trang is planning to buy a six-year bond that pays a coupon of 10 percent semiannually. given the current price of $878.21, what is the yield to maturity on these bonds? (round to the closest answer.)

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  1. 8 December, 04:08
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    Given that the coupon rate is 10% p. a, given that the coupon is paid semi-annually, then the semi annual rat will be:

    10/2=5%

    hence the amount paid will be:

    5/100*879.21

    =$43.7605

    hence the yield will be given by:

    yield = (coupon) / (market price of bond)

    43.7605/876.21

    =0.04884%~0.05%
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