1. What is the price for a $1,000 par, 20 year, 8% coupon bond with annual payme

Question

1. What is the price for a $1,000 par, 20 year, 8% coupon bond with annual payments and a 7% yield to maturity?

2. What is the price for a $1,000 par, 5 year, 6% coupon bond with annual payments and a 9% yield to maturity?

3. What is the yield to maturity for a $1,000 par, 10 year, 8% coupon bond with semiannual payments, callable in 3 years for $1,050 that sells for $1,071.06?

4. What is the yield to call for a $1,000 par, 15 year, 8% coupon bond with annual payments, callable in 3 years for $1,050 that sells for $950?

Explanation / Answer

1. FV = 1000, PMT = 80, rate = 7%, N = 20

use PV funciton in Excel

price = 1105.94

2. FV = 1000, PMT = 60, rate = 9%, N = 5

price = 883.31

3. FV = 1000, N = 20, PMT = 45, PV = -1071.06

use rate funciton and multiply by 2

YTM = 7.96%

4. FV = 1050, PV = -950, N = 3, PMT = 80

YTC = 11.55%

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