Suppose I am presented 2 bonds
YTM
Coupon
A
5%
6%
B
5%
4%
Given that both bonds have the same YTM, tenor, credit risk would either bond be better than another?
A couple of things come to mind. In particular that the Macaulay duration (how fast an investor gets their money back) of...
Learning objectives: Distinguish between gross and net realized returns, and calculate the realized return for a bond over a holding period including reinvestments. Define and interpret the spread of a bond, and explain how a spread is derived from a bond price and a term structure of rates...
AIMs: Define, interpret, and apply a bond’s yield-to-maturity (YTM) to bond pricing. Compute a bond's YTM given a bond structure and price. Explain the relationship between spot rates and YTM. Calculate the price of an annuity and a perpetuity.
Questions:
316.1. Assume the following 2-year...
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