1. Calculate the YTM. Bond Yields-Excel Sign In FILE HOME INSERT PAGE LAYOUT FOR

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1. Calculate the YTM. Bond Yields-Excel Sign In FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW .111 ??? A A Alignment Number Conditional Format as Cell Cells Editing Formatting Table Styles Styles Clipboard G A1 Stone Sour Corp issued 20-year bonds two years ago at a coupon rate of 7.1 percent. The bonds make serniannual payments. If these bonds currently sell for 105 percent of par value, what is the YTM? 1/1/2000 1/1/2018 7.10% Settlement date Maturity date Annual coupon rate71 Coupons per year Face value (% of par) Bond price (% of par) 10 100 105 12 13 14 15 16 17 Complete the following analysis. Do not hard code values in your answers. Yield to maturifty 19 20 21 sheeti

Explanation / Answer

If we go by the formula for calculating the YTM of a bond, then YTM = (C + ( F - P ) / n) / (F+P)/2

So we have semiannual coupons, so C = 36.5. F = 1000, P will be the price at settlement date = 1050.

SO the YTM = 3.425%. But this is semiannual yield. So annual YTM = 6.85%

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