Sep/Dec 17 sample Q1 (b) (i)

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March 3, 2018 at 12:10 pm #439867
mansoor
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Sir

In calculating the coupon for the new bond, i tried a different approach:

1. i computed the YTM of the existing bond … (i have seen this being done in other questions) – i got a ytm of 3%

107.81=5.57/(1+r) + 5.57/(1+r)2 + 105.57/(1+r)3

2. then computed the coupon using the above YTM. I got a 3% YTM but i get a coupon of 3%

can u plz comment?
March 3, 2018 at 12:20 pm #439881
John Moffat
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You would get credit for what you are doing, but what the examiners answer does is correct (and really came from an earlier technical article).
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