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A bond has a $1,000 par value, 10 years to maturity, and a 7% annual coupon and sells for $985. a. What is its yield to maturity (YTM)? b. Assume that the yield to maturity remains constant for the next three years. What will the price be 3 years from today?

Respuesta :

beingteenowfmao

Answer:

a) fv 1000 n 10 pmt 70 pv -985 solve for i

= 7.215%

b) solve for pv for three years into the future fv1000 n 7, pmt 70, pv ?

=988.46

*price is reflective of how many years have gone by so when three years go by there is still 7 years left so n is 7

* higher than before because as you get close

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