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A 30-year maturity bond with face value of $1,000 makes semiannual coupon payments and has a coupon rate of 8.0%. (Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places.) a. What is the yield to maturity if the bond is selling for $970? Yield to maturity % b. What is the yield to maturity if the bond is selling for $1,000? Yield to maturity % c. What is the yield to maturity if the bond is selling for $1,130? Yield to maturity %

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Answer:

Bond face value $1.000

Semiannual coupon payments

Coupon rate 8%

a. What is the yield to maturity if the bond is selling for $970?

Yield to maturity 8.27%

If you buy this bond today, you will earn 8.27% per year.

b. What is the yield to maturity if the bond is selling for $1,000?

Yield to maturity 8.00%

If you buy this bond today, you will earn 8.00% per year.

c. What is the yield to maturity if the bond is selling for $1,130?

Yield to maturity 6.96%

If you buy this bond today, you will earn 6.96% per year.

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