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How the number of years to maturity and coupon rate affect

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Question 1: Greg is considering another bond, Bond D. It has an 8% semiannual coupon and a $1,000 face value. Bond D is scheduled to mature in 9 years and has a price of $1,150. It is also callable in 5 years at a call price of $1,040. What is the bond's YTM? What is the bond's YTC? If Mr. Greg were to purchase this bond, would he be more likely to receive the YTM or YTC? Explain your answer.

Question 2: Price each bond and explain how the number of years to maturity and the coupon rate affect the current price of bonds. Assume a YTM of 7%.

  1. A 4-year bond with a 9% annual coupon
  2. A 4-year bond with a zero coupon
  3. A 15-year bond with a 9% annual coupon
  4. A 15-year bond with a zero coupon

Reference no: EM132554552

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