Question

Due: Tuesday, January 29th 1. Please watch these videos on bonds, Bond Valuation (3:58), Bond Basics (7:04), and Calculating YTM in EXCEL and TI w Bionic Turtle (8:57), then answer the following questions: $1,000 par value bond, has 7.5 percent, and 10 years until maturity. Assuming semi-annual coupon payments: a. b. What is the bond's price? an annual coupon rate of 6 percent, an annual yield to maturity of What is the bond's coupon payment per period? c. If the bond were selling for $929, what would the annual yield-to-maturity be? d. If the bond were selling for $929, what would the effective yield-to-maturity if you reinvest coupon payments at 9 percent?

Answer 1

USing excel to calculate bond price, YTM and reinvestment YTM

a)	Bond's Coupon Payment per Period=		60	(=6% *1000)
b)	Bond's Price=	$897.04	Using Excel Formula=PV(7.5%,10,-60,-1000)
c)	YTM=	7.01%	Using Excel Formula=RATE(10,60,-929,1000)
d)	FV of Coupons	$911.58
	Par Value	1000
	Total	$1,911.58
	YTM=	7.48%	Using Excel Formula=RATE(10,0,-929,1911.58)

Please Discuss in case of Doubt

Best of Luck. God Bless
Please Rate Well