• A four-year bond with a 7% coupon rate and maturity value of

Rs.1000 is currently selling at Rs.905. What is the yield to maturity?

• A Rs.100 par value bond bearing a coupon rate of 11% matures after
five years. The expected yield to maturity is 15%. Can the investor buy
it? The present market price is Rs.82.
Zero-Coupon Bond
(a) Determine the price of Rs.1000 zero coupon bond with yield to
maturity (YTM) of 18% and 10 years to maturity.

(a) What is the YTM of this bond if its price is Rs.220?

• Arvind is considering buying a Rs.1000 par value bond bearing a
coupon rate of 11% that matures after five years. He wants a
minimum yield to maturity of 15%. The bond is currently sold at
Rs.870. Should he buy the bond?
• Anand owns Rs.1000 face value bond with five years to maturity. The
bond has ab annual coupon of Rs.75. The bond is currently priced at
Rs.970. Given an appropriate discount rate of 10%, should Anand
hold or sell the bond?
Comparing Bonds with Different