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YTM

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA AFM Exams › YTM

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
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  • March 2, 2021 at 6:43 am #612514
    Jiya024
    • Topics: 168
    • Replies: 56
    • ☆☆☆

    this is really annoying me sir! your inputs as to which one to follow 1st or 2nd?

    sir if we have a 3year bond. we have been provided with government bond yield of 4,25%, and we have been provided with 1year credit spread=75 , 2yr =95 and 3yr 120 basis for a single rating of “AA”, in order to value the MV of bond, do we use YTM as:

    1st one: 5% for 1st yr coupon,5.2% for 2nd yr coupon and 5.45% for 3rd yr capital and coupon
    or 2nd method of: 5.45% i.e. 4.25+1.2=5.45% for all the 3years coupon and final repayment?

    March 2, 2021 at 9:29 am #612561
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49598
    • ☆☆☆☆☆

    It is the first method.

    Have you read the technical article about this on the ACCA website?

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