Question

A 7% semiannual coupon bond matures in 4 years. The bond has a face value of $1,000 and a current yield of 7.5452%.

What is the bond's price? Do not round intermediate calculations. Round your answer to the nearest cent.
$

What is the bond's YTM? (Hint: Refer to Footnote 7 for the definition of the current yield and to Table 7.1.) Do not round intermediate calculations. Round your answers to two decimal places.

Answer 1

1.

Current yield = Coupon / Bond price

7.5452% = 70 / Bond price

Bond price = 70/7.5452%

Bond price = $927.74

2.

Yield to Maturity = 9.20%

Using financial calculator BA II Plus - Input details:	#
FV = Future Value =	-$1,000.00
PV = Present Value =	$927.74
N = Total number of periods = Number of years x frequency =	8
PMT = Payment = Coupon / frequency =	-$35.00
CPT > I/Y = Rate per period or YTM per period =	4.600
Convert Yield in annual and percentage form = Yield*frequency / 100 =	9.20%