Question

3. You own a 30-year, $1000 face value bond paying 9% coupon annually. If market price of the bond is 1500, what should be the Yield to Maturity of the bond?

You also own a 30-year, $1000 face value bond paying 9% coupon annually. What should be the market price of the bond so that its Yield to Maturity is exactly 7%?

Answer 1

Using financial calculator
1.
N=30
PMT=9%*1000=90
PV=-1500
FV=1000
CPT I/Y=5.54327%

2.
N=30
PMT=-9%*1000
I/Y=7%
FV=-1000
CPT PV=1248.18

Answer 2

SOLUTION :

For the first bond,

Using online calc. 

Ref : https://dqydj.com/bond-yield-to-maturity-calculator/

And plugging the following :

Market price of the bond ($) = 1500

Face value ($) = 1000

Years to Maturity = 30

Annual Coupon rate (%) = 9

Coupon Frequency  = Annually

Press the button : Calculate.

We get :

Yield rate = 5.543 % (ANSWER).

For the second bond :

Using online calc. 

https://dqydj.com/bond-pricing-calculator/

And plugging the following :

Face value ($) = 1000

Annual Coupon rate (%) = 9.0

Market rate/Yield (%) = 7.0

Years to Maturity = 30

Days since last payout = 0 

Coupon Frequency  = Annually

Press the button : Calculate / Compute

We get :

Market price (Clean) ($) = 1248.18  (ANSWER).