Question

Calculate yield to maturity for a bond that is trading at $890 carrying a coupon rate of 7.5 percent with 10 years left to maturity. Please show with ti-83

Answer 1

K = N

Bond Price =∑ [(Annual Coupon)/(1 + YTM)^k]     +   Par value/(1 + YTM)^N

k=1

K =10

890 =∑ [(7.5*1000/100)/(1 + YTM/100)^k]     +   1000/(1 + YTM/100)^10

k=1

YTM% = 9.23

Using Calculator: press buttons "2ND"+"FV" then assign

PV =-890

PMT = Par value * coupon %=1000*7.5/(100)

N =10

FV =1000

CPT I/Y

Using Excel

=RATE(nper,pmt,pv,fv,type,guess)

=RATE(10,-7.5*1000/(100),890,-1000,,)