Question

What is the yield to maturity of a 6.6% coupon rate, $1,000 par value bond which...

What is the yield to maturity of a 6.6% coupon rate, $1,000 par value bond which is currently priced at $1,043 with 8 years to maturity?
  • A. 6.17%
  • B. 5.92
  • C. 5.39%
  • D. 5.91%
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Homework Answers

Answer #1

Given,

Coupon rate = 6.6%

Par value = $1000

Current price = $1043

Years to maturity = 8 years

Solution :-

Semi annual coupon payment (PMT) = $1000 x 6.6% x 6/12 = $33

Semi annual maturity (NPER) = 8 years x 2 = 16

FV = 1000

PV = -1043

Yield to maturity = 2.96% x 2 = 5.92%

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