A 30-year maturity bond with face value of $1,000 makes semiannual coupon paymen
ID: 2711916 • Letter: A
Question
A 30-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 10%.
What is the bond’s yield to maturity if the bond is selling for $1,020? Enter annual yield to maturity as your answer. (Do not round intermediate calculations. Round your answer to 3 decimal places.)
What is the bond’s yield to maturity if the bond is selling for $1,220? Enter annual yield to maturity as your answer. (Do not round intermediate calculations. Round your answer to 3 decimal places.)
A 30-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 10%.
Explanation / Answer
A 30-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 10%.
a.What is the bond’s yield to maturity if the bond is selling for $1,020? Enter annual yield to maturity as your answer. (Do not round intermediate calculations. Round your answer to 3 decimal places.)
Annual yield to maturity= rate(nper,pmt,pv,fv)*2
Nper (indicates the semi annual period) = 30*2 =60
PV (indicates the price) = -1020
PMT (indicate the semi annual payment) = 1000*10%*1/2 = 50
FV (indicates the face value) = 1000
Rate (indicates YTM) = ?
Annual yield to maturity = rate(60,50,-1020,1000)*2
Annual yield to maturity = 9.792%
b. What is the bond’s yield to maturity if the bond is selling for $1,000? Enter annual yield to maturity as your answer. (Do not round intermediate calculations.)
Annual yield to maturity= rate(nper,pmt,pv,fv)*2
Nper (indicates the semi annual period) = 30*2 =60
PV (indicates the price) = -1000
PMT (indicate the semi annual payment) = 1000*10%*1/2 = 50
FV (indicates the face value) = 1000
Rate (indicates YTM) = ?
Annual yield to maturity = rate(60,50,-1000,1000)*2
Annual yield to maturity = 10%
c.What is the bond’s yield to maturity if the bond is selling for $1,220? Enter annual yield to maturity as your answer. (Do not round intermediate calculations. Round your answer to 3 decimal places.)
Annual yield to maturity= rate(nper,pmt,pv,fv)*2
Nper (indicates the semi annual period) = 30*2 =60
PV (indicates the price) = -1220
PMT (indicate the semi annual payment) = 1000*10%*1/2 = 50
FV (indicates the face value) = 1000
Rate (indicates YTM) = ?
Annual yield to maturity = rate(60,50,-1220,1000)*2
Annual yield to maturity = 8.047%
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