A bond can be purchased for $965 today. This bond pays $112 in interest each yea

Question

A bond can be purchased for $965 today. This bond pays $112 in interest each year in annual year end payments. The bond has a par or maturity value of $1,000 and has 9 years to maturity. What is the expected yield to maturity for this bond? (Two decimal places please for example 8.25%)

A different bond pays 7.2% annual interest once per year, has 9 years to maturity, and a $1,000 par or maturity value. Given the risk level of this bond the market demands a 8.2% interest rate. What is the value of this bond today

Explanation / Answer

1. 11.85%

2. 938.04

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