Ques 1
for row 1
Coupon
=1000*8%=80
Formula
Pv=C*(1/1+r)^n
+ c *{1-(1/1+r)^n}/r
Part 1
Pv=C*(1/1+r)^n
1000*(1/1+0.06)^3
1000*0.8396
839.4
Part 2
c
*{1-(1/1+r)^n}/r
80*{1-(1/1+0.06)^3}/0.06
80* 2.6730
213.84
=839.4+213.84=1053.24 bond current value
Ques 2
Point a
Coupon
100*7%=7
YTM=Coupon
+ gain/price
Gain
=100-80=20
=7+20/80=33.75%
YTM
Point B
Formula when bond equal its face value
YTM
=coupon/price=8/100=8%
Point C
Formula when bond above its face value
YTM =coupon
- loss/price
Loss
=110-100=10
9-10/110=0.09%
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