Bond's Yield - Hull 4.12a Solution ( BT page 15 of 24)

[notjusttp]

Hi David,

You have got the solution to this problem as yield = 7.588 and concluded that solution manual is incorrect. However I can see that you have equated the Cash Price ( Bond value ) as 100 while the problem explicitly states it as 104.

So PV of Cashflows should be equated to 104 and yield should be 6.407%.

Kindly clarify if i am missing some point here.

Thanks and Best Rgds
Amit

 

[David Harper CFA FRM]

Hi Amit,

Yes, I don't know what i was thinking (??!!), my mistake certainly you are correct. Thanks for pointing this out, will fix...David