March/June 2017 (past year paper)

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May 15, 2018 at 2:23 pm #452088
wingyee
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Qeustion 4a(Toltuck co)
is that the yield to maturity is same as cost of debt?
And
how can we get the government yield curve,is that any formula available?
In the answer,the govenment yield curve of bond 1 is 109/(1+r),where is the 109 comes from?
May 15, 2018 at 6:57 pm #452156
John Moffat
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The yield to maturity is the same as the return to investors (which is not the same as the cost of debt because the cost of debt includes the tax relief on the interest).
109 is the interest plus the redemption in 1 years time.
Have you watched any of my free lectures?
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