Question

A 6.25 percent coupon bond with 19 years left to maturity is offered for sale at $1,095.25. What yield to maturity is the bond offering? (Assume interest payments are semiannual.) (Round your answer to 2 decimal places.)

Answer 1

K = Nx2

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

k=1

K =19x2

1095.25 =∑ [(6.25*1000/200)/(1 + YTM/200)^k]     +   1000/(1 + YTM/200)^19x2

k=1

YTM% = 5.44