A 15-year maturity bond with face value of $1,000 makes semiannual coupon paymen
ID: 2710643 • Letter: A
Question
A 15-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 12%.
What is the bond’s yield to maturity if the bond is selling for $1,070? Enter annual yield to maturity as your answer.
What is the bond’s yield to maturity if the bond is selling for $1,000? Enter annual yield to maturity as your answer.
What is the bond’s yield to maturity if the bond is selling for $1,270? Enter annual yield to maturity as your answer
What is the bond’s yield to maturity if the bond is selling for $1,000? Enter annual yield to maturity as your answer.
What is the bond’s yield to maturity if the bond is selling for $1,270? Enter annual yield to maturity as your answer
Explanation / Answer
Using excel to calculate using above formulae the YTM comes to:
Thus the YTM for a bond selling price of $1070, $1000 & $1270 comes to 11.03%, 12.00% and 8.74%.
Bond Price = Par Value × Coupon Rate × 1 (1 + r)m×n + Par Value r (1 + r)m×nRelated Questions
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