Fint e con exty er a se en yer maurty 6S cu on bond setng at

Fint \"e con exty er a se en yer maurty 6S cu on bond setng at a yet to ma to 4 decimal places.) ty of 7 6% The bond pays ns co ons annualy Do not round intermediate calculations. Round your answer Convexity

Solution

Let Face Value is RS.100

MV = MATURITY VALUE,. FV= FACE VALUE

INTEREST WILL ALWAYS BE PAID ON FACE VALUE

IN THIS QUESTION YTM IS 7.6%

YTM = (Interest + (MV-FV)/n))/((MV+FV)/2)

LET FACE VALUE BE RS 100

7.6%=6.2 +((X-100)/7)
( X+ 100)/2

0.266X+26.6=X-56.6

THEREFORE X = MATURITY VALUE =113.35