Question

Calculate the yield to maturity (i.e., YTM) for the following bond. The bond matures in 22 years, has a coupon rate of 8.0% with semi-annual payments. The par value of the bond is $1000, while the current market value equals $845.93. (Round to 100th of a percent and enter your answer as a percentage, e.g., 12.34 for 12.34%)

Answer 1

Calculate the YTM as follows:

* in =RATE(22*2,1000*8%/2,-845.93,1000) Function Arguments х RATE Nper 22*2 Pmt 1000*8%/2 Pv -845.93 1000 = 44 = 40 = -845.93 = 1000 Type E = number = 0.04853943 Returns the interest rate per period of a loan or an investment. For example, use 6%/4 for quarterly payments at 6% APR. Pv is the present value: the total amount that a series of future payments is worth now. Formula result = 4.85394% Help on this function OK Cancel

Semiannual rate = 4.85394%

YTM = 4.85394%*2 = 9.71%.