CourseLover

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    Devry University
    Sep-2004 - Aug-2010

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    NatSteel Holdings Pte Ltd
    Aug-2007 - Jul-2017

Category > Business & Finance Posted 09 Dec 2017 My Price 10.00

relationship between rd and the bond's coupon rate

Question:

In this equation...what does IFA mean?

1)  What is the YTM on a 10 year, 9% annual coupon, $1,000 par value bond that sells for $877? That sells for $1,134.20? What does the fact that a bond sells at a discount or at a premium tell you about the relationship between rd and the bond's coupon rate?

n= 10

PV=-887

pmt=90  

FV=1000

r=unknown

Using the below equation to first find $877:

887 = $90(PVIFAr10) + $1,000(PVIFr10)

= $90 ((1- 1/(1+r)10)/r) + $1,000 (1/(1+r)10)

The Yield to Maturity = 10.91%

Answers

CourseLover
(12)
Status NEW Posted 09 Dec 2017 07:12 AM My Price 10.00

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