Question

Example: A 3-year, 8% annual coupon bond, with a face value of $1,000 sells for $1,053.46. What is the yield to maturity? 1,053.46 = 20 $80 $80 ($80+ $1,000) ***(1+r)" * (1+r)? * (1+r)?

Answer 1

Function Arguments ? x RATE Nper 3 Pmt 80 Pv -1053.46 Fv 1000 Type o = 3 = 80 = -1053.46 - 1000 1 = 0.060000086 Returns the interest rate per period of a loan or an investment. For example, use 6%/4 for quarterly payments at 6% APR. Type is a logical value: payment at the beginning of the period = 1; payment at the end of the period = 0 or omitted. Formula result = 6.00% Help on this function OK Cancel

Hence Yield to maturity is r=6%

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