Homework answers / question archive / (a) A bond has a coupon rate of 6%, a maturity date of 1st August 2023, a current value of £115 (par value of £100) and the coupon frequency is semi-annual

(a) A bond has a coupon rate of 6%, a maturity date of 1st August 2023, a current value of £115 (par value of £100) and the coupon frequency is semi-annual

Finance

Share With

(a) A bond has a coupon rate of 6%, a maturity date of 1st August 2023, a current value of £115 (par value of £100) and the coupon frequency is semi-annual. If today is 1st August 2019, calculate the nominal yield, the current yield, and the yield to maturity of the bond. (10 Marks) (b) Using the Yield to Maturity (YTM) calculation in part a) calculate the current price for the bond and discuss your findings. (7 Marks) (c) State 4 factors that will affect the yield of a bond? Explain clearly how the bond yield will be affected by each factor (maximum 200 words). (8 Marks)