Guys, is the following correct? A 10% coupon bond, annual payments, maturing in 10 years, is expected to make all coupon payments, but to pay only 50% of par value at maturity. What is the expected yield on this bond if the bond is purchased for $975? A) 8.68%. B) 6.68%. C) 10.68%. D) 11.00%. PMT = 100; N = 10; FV = -500; PV = 975; CPT ¨ I = 6.68 Is FV not equal to $500??
looks correct to me.
When I type the numbers as you’ve listed into my calculator, I get a (-) rate. For the calculator to work, either your FV or PV must be negative. I think your PMT and FV must have the same sign when they are both inflows (or both outflows).
yes, of course. thanks!!
Forumreader is correct. The easiest way to remember is that on a bond, you PAY the PV and RECEIVE the PMT and FV.