Compute its current yield to maturity if the bonds price

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Reference no: EM13890123

Assume that you have just purchased a 3-year bond that is red empted at par with face value $1,000 and pays coupons semi-annually with annual rate 8%. If the bond is currently trading at a yield of 6%. Compute (assuming that interest will also be paid at expiry):

(a) Its current price.

(b) Its current yield to maturity if the bond’s price, calculated in (a), falls by 10%.

Reference no: EM13890123

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