#17 You purchased a 14year, $1,000 bond with a 4.6% semiannual coupon three years ago at a price of $1,015. Today you sold the bond at a price of $1,111. What was the yield to maturity when you sold the bond?
A. 3.84%
B. 3.38%
C. 4.45%
D. 5.33%
Face Value =  1000 
semiannual Coupon Amount = 1000*4.6%*1/2 =  23 
Number of Semiannual periods (n) at time of sale= 143 = 11 years*2=  22 
sale price of bond =  1111 
Bond price formula = Coupon amount * (1  (1/(1+i)^n)/i + face value/(1+i)^n 

(i) is that Semiannual rate at which bond price will be equal to current market price. 

So Assume i=1.6% 

bond price = 23*(1(1/(1+1.6%)^22))/1.6% + 1000/(1+1.6%)^22 

1128.956443  
assume (i) =1.7% 

bond price = 23*(1(1/(1+1.7%)^22))/1.7% + 1000/(1+1.7%)^22 

1109.361323  
interpolation formula = lower rate +((uper rate  lower rate)*(Uper price  bond actual price)/(uper price  lower price)) 

1.6% +((1.7%1.6%)*(1128.9564431111)/(1128.9564431109.361323)) 

0.01691637321  
annual yield to maturity =  0.03383274642 
So annual yield to maturity is 0.0338 or 3.38% 
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