Perpetuities, YTM, and Bond Pricing: Finance Insights Unveiled

Chapter 4, Problem 22

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QUESTION:

What is the price of a perpetuity that has a coupon of $70 per year and a yield to maturity of 1.5%? If the yield to maturity doubles, what will happen to the perpetuity’s price?

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QUESTION:

What is the price of a perpetuity that has a coupon of $70 per year and a yield to maturity of 1.5%? If the yield to maturity doubles, what will happen to the perpetuity’s price?

ANSWER:

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Given data:

Perpetuity has a coupon of $70 per year and a yield to maturity of 1.5%.

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Perpetuities, YTM, and Bond Pricing: Finance Insights Unveiled
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Unlock the world of perpetuities in finance with this illuminating video. Discover the significance of yield to maturity, grasp bond pricing dynamics, and learn how financial instruments are valued


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