On January 1, 2005, a cooperation issues 15 year 8% semi annual coupon bond with a...

On January 1, 2005, a cooperation issues 15 year 8% semi annual coupon bond with a face value of 1,000 (Coupons are paid at the end of June and end of December). The bond can be redeemed, at the option of the cooperation. 1. On any coupon date in 2016 or 2017 at par 2. On any coupon date in 2018 through end of 2019 for amount of 1,200 Find the minimum annual yield to maturity(nominal- compounded semi annually) if the bond is purchased for 1200

Solutions

Expert Solution

as the bond is purchased at $1200 it means that the bond is redeemed between 2018 and 2019 at any coupon date

Computation of YTM at 4 coupon dates

as per Calculation minimum annual Yield to maturity if the bonds are purchased for 1200 is 8.67% (2019 second Coupon)

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jeff jeffy answered 1 year ago

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