A 10-year maturity bond with par value $1,000 makes semiannual coupon payments a
ID: 2775051 • Letter: A
Question
A 10-year maturity bond with par value $1,000 makes semiannual coupon payments at a coupon rate of 6%.
Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $940. (Round your intermediate calculations to 4 decimal places. Round your answers to 2 decimal places.)
Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $1,000. (Do not round intermediate calculations.Round your answers to 2 decimal places.)
Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $1,040.(Round your intermediate calculations to 4 decimal places. Round your answers to 2 decimal places.)
a.Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $940. (Round your intermediate calculations to 4 decimal places. Round your answers to 2 decimal places.)
Explanation / Answer
A 10-year maturity bond with par value $1,000 makes semiannual coupon payments at a coupon rate of 6%.
Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $940. (Round your intermediate calculations to 4 decimal places. Round your answers to 2 decimal places.)
Bond equivalent yield to maturity= rate(nper,pmt,pv,fv)*2
Nper (indicates the semi annual period) = 10*2 = 20
PV (indicates the price) = 940
PMT (indicate the semi annual payment) = 1000*6%*1/2 = 30
FV (indicates the face value) = 1000
Rate (indicates YTM) = ?
Bond equivalent yield to maturity= rate( 20,30,-940,1000)*2
Bond equivalent yield to maturity = 6.84%
Effective annual yield to maturity = (1+Bond equivalent yield to maturity/2)^2 -1
Effective annual yield to maturity = (1+6.84%/2)^2 -1
Effective annual yield to maturity = 6.96%
Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $1,000. (Do not round intermediate calculations.Round your answers to 2 decimal places.)
Since Bond Price is trading at par
Bond equivalent yield to maturity = Coupon rate = 6%
Effective annual yield to maturity = (1+Bond equivalent yield to maturity/2)^2 -1
Effective annual yield to maturity = (1+6%/2)^2 -1
Effective annual yield to maturity = 6.09%
Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $1,040.(Round your intermediate calculations to 4 decimal places. Round your answers to 2 decimal places.)
Bond equivalent yield to maturity= rate(nper,pmt,pv,fv)*2
Nper (indicates the semi annual period) = 10*2 = 20
PV (indicates the price) = 1040
PMT (indicate the semi annual payment) = 1000*6%*1/2 = 30
FV (indicates the face value) = 1000
Rate (indicates YTM) = ?
Bond equivalent yield to maturity= rate( 20,30,-1040,1000)*2
Bond equivalent yield to maturity = 5.48%
Effective annual yield to maturity = (1+Bond equivalent yield to maturity/2)^2 -1
Effective annual yield to maturity = (1+5.48%/2)^2 -1
Effective annual yield to maturity = 5.55%
a.Find the bond equivalent and effective annual yield to maturity of the bond if the bond price is $940. (Round your intermediate calculations to 4 decimal places. Round your answers to 2 decimal places.)
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.