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What is the yield to maturity

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1. Verbrugge Company has a level-coupon bond outstanding that pays coupon interest of $120 per year and has 10 years to maturity. The face value of the bond is $1,000. If the yield for similar bonds is currently 14%, what is the bond's current market value?

2. For the Verbrugge Company bond described in Problem 1, find the bond's value if the yield for similar bonds decreases to 12%.

3. For the Verbrugge Company bond described in Problem 1, find the bond's value if the yield for similar bonds decreases to 9%.

4. Suppose the Verbrugge bond paid interest semiannually. What is its value if the yield is 14%?

5. A firm issues an annual bond today with a $1,000 face value, an 8% annual coupon interest rate, and 25-year maturity. An investor purchases the bond for $1,000. What is the yield to maturity (YTM)?

6. Suppose the investor bought the bond described in the previous problem for $900. What's the YTM?

Reference no: EM131909654

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