2 (A.B.C) 3 (Above / Below) 4 (Gain / Loss) What is the yield to maturity on the

Question

2 (A.B.C)

3 (Above / Below)

4 (Gain / Loss)

What is the yield to maturity on these $100 face value one-year bonds? Instructions: Round your answers to the nearest tenth (1 decimal place) and insert a negative sign if needed. A 6 percent coupon bond selling for $85. Yield to maturity is____% A 7 percent coupon bond selling for $I00. Yield to maturity is____% An 8 percent coupon bond selling for $115. Yield to maturity is____% Option has the highest yield to maturity. While Option has the lowest coupon rate, it is selling face value, and so there is a capital

Explanation / Answer

a)

b)

c)

Face value (FV) $                                                     100.00 Coupon rate 6.00% Number of compounding periods per year                                                                    1 Interest per period (PMT) $                                                          6.00 Bond price (PV) $                                                     (85.00) Number of years to maturity 1 Number of compounding periods till maturity (NPER)                                                                    1 Bond Yield to maturity RATE(NPER,PMT,PV,FV) Bond Yield to maturity 24.7%

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