Question

1.There is a corporate bond in the market that is selling for $1,245.84 each, stated rate of interest of 7.81% with a maturity of 7 years. What is the yield-to-maturity (YTM) of this bond?

a. 1.89%

b. 0.94%

c. 7.56%

d. 3.78%

2. You are eyeing an investment in a corporate bond which has a YTM of 6.00%, and a stated rate of interest of 15.00% with a maturity of 30 years. What is the price of this bond?

a. $2,245.40

b. $4,321.07

c. $2,821.64

d. $1,206.47

Answer 1

COUPON RATE 7.81% YEARS TO MATURITY 7 14 (years to maturity x 2) NPER 39.05 (face value x coupon rate)/2 PMT $1,000.00 FACE VALUE $1,245.84 PRICE PV = RATE 1.89% rate(nper,pmt,-pv,fv) rate(14,39.05,-1245.84,1000) 3.78% YIELD TO MATURITY = RATE X 2 [1.89% *2)