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Calculate the yield to maturity on the following bonds:
1) An 8.6 percent coupon (paid semiannually) bond, with a $1,000 face value and 10 years remaining to maturity. The bond is selling at $915.
2) A 5.7 percent coupon (paid quarterly) bond, with a $1,000 face value and 10 years remaining to maturity. The bond is selling at $911.
3) A 7.7 percent coupon (paid annually) bond, with a $1,000 face value and 8 years remaining to maturity. The bond is selling at $1,061.

Respuesta :

Answer:

1. 9.96%

2. 6.94%

3. 6.69%

Explanation:

Solution 1:

Since it is semiannually, number of periods are = 10*2 = 20

Coupon is = (1000*0.086) / 2 = $43.

Using the financial calculator: 2nd I/Y 2, PV= -915, FV= 1000, N=20, PMT=43

Therefore, YTM = 9.96%

Solution 2:

Since it is quarterly, number of periods are = 10*4 = 40

Coupon is = (1000*0.057) / 4 = $14.25.

Using the Financial calculator: 2nd I/Y 4, PV= -911, FV= 1000, N=40, PMT=14.25

Therefore, YTM = 6.94%

Solution 3:

Since it is annual, number of periods are = 8

Coupon is = (1000*0.077) = $77.

Using Financial calculator: FV is= 1000, PV is = -1061, N is = 8, PMT is = 77.

Therefore YTM = 6.69%.

Goodluck buddy.

ogbe2k3

Answer:

Therefore, (1) 9.962% (2) 6.942%  (3) 6.691%

Explanation:

Solution

Given that:

                                                      A                     B              C

FV = Future Value =           -$1,000.00    -$1,000.00     -$1,000.00

PV = Present Value =             $915.00           $911               $1,061

N = Total number of periods

= Years x frequency =                20                  40                  8

PMT = Payment

= Coupon / frequency =           -$43.00       -$14.25          -$77.00

CPT > I/Y = Rate or YTM =         4.9810         1.7354           6.6907

Convert Yield in annual and percentage form = Yield*Frequency / 100                                                                                                                        

                                                   9.962%      6.942%         6.691%

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