A South African government bond that matures in 3 years has a face value of R1000, a 6% annual coupon rate and semi-annu
Posted: Tue Nov 23, 2021 8:58 am
A South African government bond that matures in 3 years has a face value of R1000, a 6% annual coupon rate and semi-annual coupon payments. The effective semi-annual interest rate is 5%.
a) Assume the market interest rates will be 1% for the first 1,5 (one and a half) years and 5% thereafter. What should the bond sell for?
b) Given the bond price determined in (a), what is the implied yield to maturity?
a) Assume the market interest rates will be 1% for the first 1,5 (one and a half) years and 5% thereafter. What should the bond sell for?
b) Given the bond price determined in (a), what is the implied yield to maturity?