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hello sir, i tried but couldin so can you kindly tell me how to derive the answer of follwoing question;
Q: company issue $200,000 8% loan stock, quoted at 92pc redeemable in 5years time.
what is the redemption yield?
You cannot be asked to calculate the redemption yield in Paper F9, although you are expected to know what it means (which is explained in our free lectures).
Also, it is impossible in the question you have typed because you have not typed whether the redemption will be at par or at a premium.
You can calculate the interest yield (8.70%), and since it is being redeemed at more than market value the redemption yield must be higher than 8.70%. Calculating the exact figure cannot be asked.
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