a). To find the YTM, we need to put the following values in the financial calculator:
N = 15*2 = 30;
PV = -950;
PMT = (8%/2)*1000 = 40;
FV = 1000;
Press CPT, then I/Y, which gives us 4.30
So, Periodic Rate = 4.30%
BEY = Periodic Rate * No. of compounding periods in a year
= 4.30% * 2 = 8.60%
EAY = [1 + Periodic Rate]No. of compounding periods in a year - 1
= [1 + 0.0430]2 - 1
= 1.0878 - 1 = 0.0878, or 8.78%
b). To find the YTM, we need to put the following values in the financial calculator:
N = 15*2 = 30;
PV = -1000;
PMT = (8%/2)*1000 = 40;
FV = 1000;
Press CPT, then I/Y, which gives us 4
So, Periodic Rate = 4%
BEY = Periodic Rate * No. of compounding periods in a year
= 4% * 2 = 8%
EAY = [1 + Periodic Rate]No. of compounding periods in a year - 1
= [1 + 0.04]2 - 1
= 1.0816 - 1 = 0.0816, or 8.16%
a). To find the YTM, we need to put the following values in the financial calculator:
N = 15*2 = 30;
PV = -1050;
PMT = (8%/2)*1000 = 40;
FV = 1000;
Press CPT, then I/Y, which gives us 3.72
So, Periodic Rate = 3.72%
BEY = Periodic Rate * No. of compounding periods in a year
= 3.72% * 2 = 7.44%
EAY = [1 + Periodic Rate]No. of compounding periods in a year - 1
= [1 + 0.0372]2 - 1
= 1.0758 - 1 = 0.0758, or 7.58%
A 15-year maturity bond with par value of $1,000 makes semiannual coupon payments at a coupon...
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