Question

The market price is $543 for a 10-year bond ($1,000 par value) that pays 8 % annual interest, but makes interest payments on a semiannual basis (4% semiannually). What is the bond’s yield to maturity?

Answer #1

Yield to maturity is the yield an investor earns it thye hold investment till maturity. | ||||||||

Yield to maturity |
= | =rate(nper,pmt,-pv,fv) | ||||||

= |
9.01% |
|||||||

Where, | ||||||||

nper | number of period | 20 | ||||||

pmt | coupon payment | 1000*4.0% | = | $ 40.00 | ||||

pv | current value | $ 543.00 | ||||||

fv | Future Value | = | $ 1,000.00 | |||||

The market price is $585 for a 10-year bond ($1,000 par value)
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semiannual basis (4% semiannually). What is the bond’s yield to
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Clearly show which EQUATIONS could be used to solve the
problem mathematically
Indicate the detailed steps on how to use FINANCIAL
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