Compare the current YTM and the YTM at issuance

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Reference no: EM131990295

10 years ago ABC corporation issued a 20-year bond with $1000 par value, semiannual coupon payment, 10% coupon rate at YTM=10%. What was the price of the bond at issuance?

Today, you check the price of that bond in the market and you realize the bond is trading at $1050. What is the current YTM of the bond? Compare the current YTM and the YTM at issuance and give at least one reason that could cause the change in YTM. (Hint: to calculate the current YTM, you need to use “rate” function in Excel)

Reference no: EM131990295

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