Question

P 6-12 (similar to) Question Hel Suppose a ten-year, $1,000 bond with an 8.2% coupon rate and semiannual coupons is trading for $1.035.73. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? b. If the bond's yield to maturity changes to 9.8% APR, what will be the bond's price? a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? The bond's yield to maturity is %. (Round to two decimal places.)

Answer 1

a) YTM is calculated using the RATE function:-

=RATE(10*2,8.2%/2*1000,-1035.73,1000)*2

=7.68%

b) Price

=PV(9.8%/2,10*2,8.2%/2*1000,1000)

=899.45