Question

please show hownti calcukate with financial calculator

Question 5. Linville Corporation issued 15-year, par $1,000 bonds ten years ago at a coupon rate of 5 percent. The bonds make semi-annual payments. In sell for 90 percent of par value, what is its yield to maturity (YIM) Pecos Company has just issued a 10-year. 10 percent coupon rate, $1,000- par bond that pays interest semiannually. Three vears later, if the going rate of interest on the bond falls to 8 percent, what is the value of the bond? Question 7. Karen just bought a 10-year, 5% coupon bond with $1.000 par for $825. If she sells this bond four years later for $950, what is her realized yield in year 4 (with semi-annual interests)?

Answer 1

5

K = Nx2

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

k=1

K =5x2

900 =∑ [(5*1000/200)/(1 + YTM/200)^k]     +   1000/(1 + YTM/200)^5x2

k=1

YTM% = 7.43

N = (15-10)*2 = 10

PMT = 1000*0.05/2 = 25

PV = -900

FV = 1000

CPT I/Y

YTM = I/Y*2