Question

A 5.3% coupon bearing bond pays interest semi-annually and has a maturity of 16 years. If the current price of the bond is $973.72, what is the yield to maturity of this bond? (Answer to the nearest tenth of a percent, e.g. 12.34%)

Answer 1

K = Nx2

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

k=1

K =16x2

973.72 =∑ [(5.3*1000/200)/(1 + YTM/200)^k]     +   1000/(1 + YTM/200)^16x2

k=1

YTM% = 5.55