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suppose an 6% coupon, $1000 par, 25 year bond is selling at 1068.21. Coupons are paid...

suppose an 6% coupon, $1000 par, 25 year bond is selling at 1068.21. Coupons are paid semiannually. what is the bonds YTM ?
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Answer #1

Face/Par value of Bond = $1000

Semi-annual coupon payment = $1000*6%*1/2

= $30

No of coupon payments(n) = No of years to maturity*2 = 25 years*2

= 50

Current Price = $1068.21

Calculating the Semi-annual YTM of the bond using Excel "Rate" function:-

Semi-annual YTM = 2.7475%

Annual YTM = 2.7475%*2 = 5.495%

So, the bond's YTM is 5.49%

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