Question

Suppose a​ ten-year, $1,000 bond with an 8.9% coupon rate and semiannual coupons is trading for $ 1,035.44.

a. What is the​ bond's yield to maturity​ (expressed as an APR with semiannual​ compounding)? (Round to two decimal places).

b. If the​ bond's yield to maturity changes to 9.4 % ​APR, what will be the​ bond's price? (Round to two decimal places).

Answer 1

If Semi Annual Coupon If Semi Annual Coupon a) b) Nper 10*2 20 Pmt Rate Nper Pmt Pv 1000*0.089*1/2 10*2 20 44.50 1000*0.089*1/2 0.094*1/2 44.50 0.047 Fv $ (1,035.44) 1,000.00 Fv 1,000.00 (-PV(rate,nper,pmt,fv)) |(-PV(0.047,20,44.50,1000)) $968.04 Pv RATE(nper,pmt,pv, fv) RATE(20,44.50,-1035.44,1000) Rate Yield to maturity Yield to maturity Yield to maturity Current price of Bond $968.04 4.18% 4.18%*2 p.a 8.37% p.a payment Number of periods Presnt value Face value Pmt Nper Pv Fv