June 2014 part 3

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September 13, 2019 at 12:31 pm #546020
toushiga
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Hello Tutor, for this lecture https://opentuition.com/acca/p4/acca-p4-question-1-june-2014-part-3/

The CMC Co part (c)
If the question said the Gross redemption yield is not the same as the interest rate(coupon rate), should take the PV of the repayment discount back (annuity factor) using the YTM or coupon rate?

Thank you.
September 13, 2019 at 1:11 pm #546024
John Moffat
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The gross redemption yield (or yield to maturity) will normally not be the same as the coupon rate.

To get the MV you discount at the YTM.

I explain this in my free lectures on the valuation of securities.
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