Question

A 15 year maturity bond with face value of $1.000 makes semiannual coupon payments and has a coupon rate of 12% a What is the bond's yield to maturity of the bond is selling for $940? Enter annual yield to maturity as your answer. (Do not round Intermediate calculations. Round your answer to 3 decimal places.) Annual yield to maturity b. What is the bond's yield to maturity of the bond is selling for $1,000? Enter annual yield to maturity as your answer. (Do not round Intermediate calculations.) Annual yield to maturity c. What is the bond's yield to maturity if the bond is selling for $1,140? Enter annual yleld to maturity as your answer. (Do not round Intermediate calculations. Round your answer to 3 decimal places.) Annual yield to maturity %

Answer 1

a

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2

k=1

K =15x2

940 =∑ [(12*1000/200)/(1 + YTM/200)^k]     +   1000/(1 + YTM/200)^15x2

k=1

YTM% = 12.915

b

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2

k=1

K =15x2

1000 =∑ [(12*1000/200)/(1 + YTM/200)^k]     +   1000/(1 + YTM/200)^15x2

k=1

YTM% = 12

c

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2

k=1

K =15x2

1140 =∑ [(12*1000/200)/(1 + YTM/200)^k]     +   1000/(1 + YTM/200)^15x2

k=1

YTM% = 10.162