Question

UPDATED: Need help with the Excel PV function. The current price of the bond is 914.95 and the YTM are provided. The correct answers are on the right box but I dont get those numbers.

26 27 28 29 30 Compounding Interval /Period 31 Annual 32 Semi-Annual 33 Quarterly 34 Monthly Compounding Interval Period $914.95 YTM 5.0% 8.34% 9.0% 854.25 S654.55 $622.16 1,053.61 $914.95$890.21 1,174.06 $1,091.89 $1,076.47 1,263.51 $1,232.76 $1,226.79 2 -$1,053.61- $914.95 -$890 12

Answer 1

Answer:

PV = (C*F/P)*(1-(1+r/P)*(-N*P)/(r/P) + F/(1+r/P)^N*P

Where C=annual coupon rate

r=annual interest rate

N=years to maturity

F=face value

P=number of Compounding

for P= 2

r=5%

we get

PV=(6225%*1000/2)*(1-(1+5%/2)^(-5*2))/(5%/2) + 1000/(1+5%/2)^(5*2)

PV=$1053.61

		YTM
Compounding interval /Period	914.95	5%	8.34%	9.00%
Annual	1	1053.04	916.31	892.06
SemiAnnual	2	1053.61	914.95	890.21
Quarterly	4	1053.90	914.25	889.25
Monthly	12	1054.09	913.77	888.60
Face Value   F	1000
Annual Coupon Rate   C	6.225%
Years to Maturity   N	5