There was a sudden shift in interest rates the next day so that the market rate of interest on similar bonds moved to 8.125 percent. The very next day, the interest rates dropped like a stone to 4 percent.
Interest is paid quarterly.
1000 PMT 62.5 7. You require an 11 percent nominal yield to maturity on this type of bond investment. Interest on this bond is paid every six months and the nominal annual yield is 14 percent.