Question

Please help. Answer is 0.0418.

Consider the following three bonds of S1,000 face value. Bond Maturity (year) Price Coupon Rate 4.0% A 1002.46 0.5 В 4.6 % 1006.84 1.0 1.5 0.0 % 936.80 C

Answer 1

Here as shown below in the below calculation:

The yield to maturity of the Bond A = 3.50 %, Bond B = 3.90 %, Bond C = 4.40% we have taken half-yearly coupon payments for calculating yield to maturity.

A C D G Н J K L M O 1 Bond A Bond B 2 Bond C 4% 4.60% 0% 3 1000 0.5 1002.46 1 1006.84 1.5 936.8 -1006.84 5 -1002.46 -936.8 1.95% IRR (H5 : H7) 1.75% IRR(D5:D6) 2.20% IRR ( L5 : L8 ) 6 1020 23 0 O YTD 3.50% 3.90% 4.40% 7 YTD 1023 YTD 8 1000 9

Portfolio:

Bond A - 3 shares

Bond B - 2 shares

Bond C - 5 shares

so total portfolio YTD will be - (3.50%*3+2*3.90%+5*4.40%)/10

= 4.03%

So YTD of the portfolio is 4.03%