How to solve this problem in excel?
A 20-year, 9.00% semi-annual coupon bond with a face value of $1,000 is selling for $914.20. The yield to maturity of the bond is closest to: A. 8%.B. 9%. C. 10%.
Ans:- In this question we need to find the Yield To Maturity. we will use the RATE function of excel to find the answer.
Nper = 20*2=40,Pmt = $1000*9%/2 = $45, PV = -$914.20, FV = $1000.
we have multiplied by 2 because the RATE function has given the YTM semi-annually and we need to convert it annually.
Therefore, the YTM for the bond is closest to 10%. option (c) is the right answer.
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