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  The bond shown in the following table pays interest annually. ​(Click on the icon here in...

  The bond shown in the following table pays interest annually. ​(Click on the icon here in order to copy the contents of the data table below into a​ spreadsheet.)

par value =1000

coupon interest rate=14%

years to maturity=11

current value=1110

a. Calculate the yield to maturity​ (YTM​) for the bond.

b. What relationship exists between the coupon interest rate and yield to maturity and the par value and market value of a​ bond? Explain.

business   finance   
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Answer #1

Yield to maturity is calculated using the RATE function in excel as follows:-

=RATE(nper,pmt,pv,fv)

=RATE(11,14%*1000,-1110,1000)

=12.14%

What are the options for part--b, write in the comments.

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