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What is the bond yield to maturity

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Reference no: EM132056797

Question 1 - A $1,000 face value bond of Acme Inc. pays an annual coupon and carries a coupon rate of 7.25%. It is was a 30 year bond when issued and it has 9 years remaining to maturity. If it currently has a yield to maturity of 5.75%.

(a) What interest payments do bondholders receive each year?

(b) What is the current bond price?

(c) What is the bond price if the yield to maturity rises to 6.75%?

Question 2 - A 10 year maturity bond with a coupon rate of 5.5% and face value of $1,000 makes semi-annual coupon payments. What is the bond's yield to maturity if the bond is selling for:

(a) 900?

(b) 1,000?

(c) 1,100?

Reference no: EM132056797

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