A 20-year maturity bond with face value of $1,000 makes semiannual coupon paymen

Question

A 20-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 6%.

What is the bond’s yield to maturity if the bond is selling for $990? (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 $1,190? (Do not round intermediate calculations. Round your answer to 3 decimal places.)

A 20-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 6%.

Explanation / Answer

a)

b)

C)

Coupan Payment 6%/2 x 1000 $              30 Face value $        1,000 Price $            990 Number of payments = 20 x 2 40 Since the interest payment is made semiannually YTM = (Coupan Payment + (Face value - Present value ) / n) / ((Face value + Present value)/2) YTM for half year 3.04% YTM for full year 6.08%

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