Hello everyone,
I came up with a yield calculation question today. It does not seem to be hard but somehow I was stuck with it. Hope someone can shed a light on this.
If you are given 2 bonds at different maturity dates and different coupon yields. Say, first bond matures on June 1, 2019, 3 3/4 coupon and has a yield to maturity of 1.5478. A second bond matures on June 1, 2020, 3 1/2 coupon and has a yield to maturity of 1.6790. If you want to determine yield of a bond that matures on Dec 1, 2019. How would you do that? ( Does the answer change if that bond has zero coupon or 3 3/4 or 3 1/2 coupon?) I guess this is a little bit unique since the third bond matures half-year before and after the first and the second bond. So is the approach different if the third bond is on Oct 1,2019?
Thank you,
Kami
I came up with a yield calculation question today. It does not seem to be hard but somehow I was stuck with it. Hope someone can shed a light on this.
If you are given 2 bonds at different maturity dates and different coupon yields. Say, first bond matures on June 1, 2019, 3 3/4 coupon and has a yield to maturity of 1.5478. A second bond matures on June 1, 2020, 3 1/2 coupon and has a yield to maturity of 1.6790. If you want to determine yield of a bond that matures on Dec 1, 2019. How would you do that? ( Does the answer change if that bond has zero coupon or 3 3/4 or 3 1/2 coupon?) I guess this is a little bit unique since the third bond matures half-year before and after the first and the second bond. So is the approach different if the third bond is on Oct 1,2019?
Thank you,
Kami