Answer to Question #51498 in Finance for mohammed abdu

Question #51498
In 2000 Jengka Inc. issued bonds with an 8 percent coupon rate and a RM1,000 face value. The bonds will mature on March 1, 2025. If an investor purchased one of these bonds on March 1, 2012, determine the yield to maturity if the investor paid RM1,100 for the bond.
1
Expert's answer
2015-03-25T10:02:51-0400
N = 25, if = 8%, F = RM1,000, on March 1, 2012 P = RM1,100.
The bond's current value is:
P = F*if((1 - (1 + i)^-n)/i) + F(1 + i)^-n
where:
C = F * iF = coupon payment
N = number of payments
i = market interest rate, or required yield, M = face value
P = market price of bond.
1100 = 80*((1 - 1/(1 + i)^25)/i) + 1000/(1 + i)^25
The yield to maturity i = 7.13%.

Need a fast expert's response?

Submit order

and get a quick answer at the best price

for any assignment or question with DETAILED EXPLANATIONS!

Comments

No comments. Be first!

Leave a comment

Ask Your question

LATEST TUTORIALS
New on Blog
APPROVED BY CLIENTS
paypal