Question

A Japanese company has a bond outstanding that sells for 91 percent of its ¥100,000 par value. The bond has a coupon rate of 5 percent paid annually and matures in 12 years. 

What is the yield to maturity of this bond? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g, 32.16.) 

Answer 1

Face value	¥                   100,000.00
Current price	91%	¥   91,000.00
Annual coupon payment	5%	¥     5,000.00
Redemption price	100%	¥100,000.00
		6.00%						7.00%
Year	Cash Flow	PV factor = 1/ (1+r)^t	PV					PV factor = 1/ (1+r)^t	PV
0	¥                    -91,000.00	1.000	¥-91,000.00					1.000	¥-91,000.00
1	¥                        5,000.00	0.943	¥    4,716.98					0.935	¥    4,672.90
2	¥                        5,000.00	0.890	¥    4,449.98					0.873	¥    4,367.19
3	¥                        5,000.00	0.840	¥    4,198.10					0.816	¥    4,081.49
4	¥                        5,000.00	0.792	¥    3,960.47					0.763	¥    3,814.48
5	¥                        5,000.00	0.747	¥    3,736.29					0.713	¥    3,564.93
6	¥                        5,000.00	0.705	¥    3,524.80					0.666	¥    3,331.71
7	¥                        5,000.00	0.665	¥    3,325.29					0.623	¥    3,113.75
8	¥                        5,000.00	0.627	¥    3,137.06					0.582	¥    2,910.05
9	¥                        5,000.00	0.592	¥    2,959.49					0.544	¥    2,719.67
10	¥                        5,000.00	0.558	¥    2,791.97					0.508	¥    2,541.75
11	¥                        5,000.00	0.527	¥    2,633.94					0.475	¥    2,375.46
12	¥                        5,000.00	0.497	¥    2,484.85					0.444	¥    2,220.06
12	¥                   100,000.00	0.497	¥ 49,696.94					0.444	¥ 44,401.20
			¥       616.16						¥   -6,885.37
NPV @ 0.06	¥                           616.16
NPV @ 0.07	¥                      -6,885.37
Difference in both	¥                        7,501.53
YTM	=Lower rate + Difference in rates*(NPV at lower rate)/(Lower rate NPV-Higher rate NPV)
	'=6%+ (7%-6%)*(616.15/(616.15+6885.3)
YTM	6.08%