FINE 6050

1.) BOND & STOCK VALUATION Example 1: What is the price of a $1,000 par, pure discount bond having six years left to maturity, and whose YTM is 8.25%? Which Formula to Use? PV= F (1+rt ) t How to Work the Problem: PV = $1,000/(1+.0825)6  PV = $621..50 Question 1: How do you calculate the Pure Discount Bond’s Yield to Maturity? Answer 1-e? Can be derived from PV= F (1+rt ) t  (1+rt ) t= F PV  F PV ¿ ¿ (¿ 1 T ¿)−1 rt=¿ Example 2: The December 21, 19...

1.) BOND & STOCK VALUATION Example 1: What is the price of a $1,000 par, pure discount bond having six years left to maturity, and whose YTM is 8.25%? Which Formula to Use? PV= F (1+rt ) t How to Work the Problem: PV = $1,000/(1+.0825)6  PV = $621..50 Question 1: How do you calculate the Pure Discount Bond’s Yield to Maturity? Answer 1-e? Can be derived from PV= F (1+rt ) t  (1+rt ) t= F PV  F PV ¿ ¿ (¿ 1 T ¿)−1 rt=¿ Example 2: The December 21, 19...