Question

The market price of a semi-annual pay bond is $978.94. It has 17.00 years to maturity and a coupon rate of 6.00%. Par value is $1,000. What is the yield to maturity? SHOW FINANCIAL CALCULATIONS AND EQUATIONS

Answer 1

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k]     +   Par value/(1 + YTM/2)^Nx2

k=1

K =17x2

978.94 =∑ [(6*1000/200)/(1 + YTM/200)^k]     +   1000/(1 + YTM/200)^17x2

k=1

YTM% = 6.2