Determining the yield to maturity


Problem:

A bond has a $1,000 par value, 7 years to maturity, and a 9% annual coupon and sells for $1,095.

Required:

Question 1: What is its yield to maturity (YTM)?

Question 2: Assume that the yield to maturity remains constant for the next 2 years. What will the price be 2 years from today?

Note: Explain all calculation and formulas.   

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Finance Basics: Determining the yield to maturity
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