q36 awp

Option 1: There is interest at 5% per year. The redemption is at par, so 100. So the total in the final year is 105. Option 2: There is interest at 4% per year. The redemption is at a premium of 5%, so 105. So the total in the final year is 109.

that I understood ,what i was asking was why in calculation of yield to maturity its 100 and 105 ,shouldn't the interest to be included?except this other two calculation interest has been included but in yield to maturity calc par value &premium taken no interest..why?

no reply? :(

Do you really expect that I spend all night sitting in front of the computer answering questions? Of course I have not yet replied - we say that we will answer within 24 hours and I do answer within 24 hours. The same flows have been taken in both sets of calculations - have you actually looked closely at the flows? 5, 5, 5, and 105 in each of the 4 years is exactly the same as 5 p.a. for years 1 to 4 and then 100 in 4 years time.

Oh I thought you must have forgotten as happened a day ago.I got your point ,I noticed it now that in fourth year interest was included and its exactly same 1-4yrs interest paid and showing it separately .. Sorry for this

It may have been a day ago in your time zone. Here your post arrived at 4 this morning and I am asleep at 4 in the morning!! I answered it at 10 this morning. :-)

ok.next time I will keep this in mind :D

OK :-)