Question

Harrimon Industries bonds have 5 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 8%.

1. What is the yield to maturity at a current market price of
   1. $812? Round your answer to two decimal places.

          %

   2. $1,043? Round your answer to two decimal places.

          %

Answer 1

B 9 $80 $812 $1,000 13.40% 10 Question a 11 Years to maturity (NPER) 12 Annual payment (PMT) 13 Current price (PV) 14 Par value (FV) 15 YTM = Required rate, rd (i/Y) 16 27 28 Question b 29 Years to maturity (NPER) 30 Annual payment (PMT) 31 Current price (PV) 32 Par value (FV) 33 YTM = Required rate, rd (i/Y) $80 $1,043 $1,000 6.95%

=C14*8% 812 1000 =RATE(C11,C12,-C13,C14) 9 10 Question a 11 Years to maturity (NPER) 12 Annual payment (PMT) 13 Current price (PV) 14 Par value (FV) 15 YTM = Required rate, rd (i/Y) 16 27 28 Question b 29 Years to maturity (NPER) 30 Annual payment (PMT) 31 Current price (PV) 32 Par value (FV) 33 YTM = Required rate, rd (i/Y) 34 =C32*8% 1043 1000 =RATE(C29,C30,-C31,C32)