Question

Matuirty	1	2	3	4	5
Zero-Coupon YTM	4%	4.3%	4.5%	4.7%	4.8%

Consider a five-year, default free bond with annual coupons of 5% and a face value of $1000. Assume the law of one price holds

1) what is the YTM of this bond

2) If the YTM increases to 5.2%, what would the new price be

Answer 1

1	0.04	1.04	0.961538	$       50.00	$       48.08
2	0.043	1.087849	0.919245	$       50.00	$       45.96
3	0.045	1.141166	0.876297	$       50.00	$       43.81
4	0.047	1.201674	0.832172	$       50.00	$       41.61
5	0.048	1.264173	0.791031	$ 1,050.00	$     830.58
				Price	$ 1,010.05

Now using this to calculate ytm:
=RATE(5,50,-1010.045,1000)
=4.77%

If YTM increases to 5.2%
PV:
=PV(0.052,5,50,1000)
=$991.39