Question

Harrimon Industries bonds have 6 years left to maturity. Interest is paid annually, and the bonds have a $1,000 par value and a coupon rate of 8%. What is the yield to maturity at a current market price of $781? Round your answer to two decimal places. % $1,096? Round your answer to two decimal places. %

I used RATE formula but my answer was wrong

=-RATE(6,80,-781,1000)

=-RATE(6,80,-1096,1000)

Answer 1

We can calculate the desired result as follows:

Formulas used in the excel sheet are:

So, the Yield to maturity of Bond with current price of $ 781 comes out to be 13.56% and Yield to maturity of Bond with current price of $ 1,096 comes out to be 6.04%.

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