Question

There is a corporate bond in the market that is selling for $1,136.96 each, stated rate of interest of 8.23% with a maturity of 3 years. What is the yield-to-maturity (YTM) of this bond?

How can i find the PMT that goes into the financial calculator?

Answer #1

PMT is the key to input the coupon payment.

Coupon rate= 8.23%

Coupon payment= 0.0823*$1,000= $82.30

Information provided:

Face value= future value= $1,000

Market price= present value= $1,136.96

Time= 3 years

Coupon rate= 8.23%

Coupon payment= 0.0823*$1,000= $82.30

The yield to maturity is calculated by entering the below in a financial calculator:

FV= 1,000

PV= -1,136.96

N= 3

PMT= 82.30

Press the CPT key and I/Y to compute the yield to maturity.

The value obtained is 3.3550.

Therefore, the yield to maturity is
**3.36%.**

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