Question

maturity. What is the yield of each of the following bonds if interest (coupon) is paid annually? ald to Years to Yield to Par Value $5,000.00 $1,000.00 Coupon Rate Maturity Maturity Price 10% $5,800.00 $1,200.00 5 8% 10 ? $1,000.00 9% 30 $820.00 ? $5,000.00 $4,500.00 6% 15 ? a. What is the yield of the following bond if interest (coupon) is paid annually? (Round to two decimal place Yield to Years to Maturity Price Par Value Coupon Rate Maturity $5,800.00 $5,000.00 10% 5 b. What is the yields of the following bond if interest (coupon) is paid annually? (Round to two deci mal plac Yield to Maturity % Years to Price Par Value Maturity Coupon Rate $1,200.00 $1,000.00 10 8% c. What is the yield of the folllowing bond if interest (coupon) is paid annually? (Round to two decimal pl Yield to Years to Maturity Maturity Price Par Value Coupon Rate $820.00 $1,000.00 30 9% d. What is the yield of the following bond if interest (coupon) is paid annually? (Round to two decimal Years to Yield to Maturity Maturity Par Value Coupon Rate Price $5,000.00 6% 15 % $4,500.00

if possible please show the how you got the answer using the tvm formula

Answer 1

a.Information provided:

Current price= present value= $5,800

Time= 5 years

Future value= $5,000

Coupon rate= 10%

Coupon payment= 0.10*5,000= 500

Enter the below in a financial calculator to compute the yield to maturity:

FV= 5,000

PV= 5,800

N= 5

PMT= 500

Press the CPT key and I/Y to compute the yield to maturity.

The value obtained is 6.1828.

Therefore, the yield to maturity is 6.18%.

b. Information provided:

Current price= present value= $1,200

Time= 10 years

Future value= $1,000

Coupon rate= 8%

Coupon payment= 0.08*1,000= $80

Enter the below in a financial calculator to compute the yield to maturity:

FV= 1,000

PV= 1,200

N= 10

PMT= 80

Press the CPT key and I/Y to compute the yield to maturity.

The value obtained is 5.3639.

Therefore, the yield to maturity is 5.36%.

c. Information provided:

Current price= present value= $820

Time= 30 years

Future value= $1,000

Coupon rate= 9%

Coupon payment= 0.09*1,000= $90

Enter the below in a financial calculator to compute the yield to maturity:

FV= 1,000

PV= -820

N= 30

PMT= 90

Press the CPT key and I/Y to compute the yield to maturity.

The value obtained is 11.0841.

Therefore, the yield to maturity is 11.08%.

d. Information provided:

Current price= present value= $4,500

Time= 15 years

Future value= $5,000

Coupon rate= 6%

Coupon payment= 0.06*5,000= 300

Enter the below in a financial calculator to compute the yield to maturity:

FV= 5,000

PV= -4,500

N= 15

PMT= 300

Press the CPT key and I/Y to compute the yield to maturity.

The value obtained is 7.1053

Therefore, the yield to maturity is 7.11%.

In case of any query, kindly comment on the solution.