Johnston, Inc. is selling bonds for $775.37. Each bond has an 8% coupon rate and makes payments semi-annually. The bond matures in 25 years. What is the bond’s yield-to-maturity?
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Shieldsly, Inc. has a 9 percent coupon bond that matures in 5 years. The bond pays interest annually. What is the market price of a $1,000 face value bond if the yield to maturity is 7.56 percent?
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| 1) | Yield to maturity | =rate(nper,pmt,pv,fv)*2 | ||||||
| = 10.57% | ||||||||
| Where, | ||||||||
| nper | = | Number of period | = | 25*2 | = | 50 | ||
| pmt | = | Coupon Payment | = | 1000*4% | = | $ 40.00 | ||
| pv | = | Price | = | $ -775.37 | ||||
| fv | = | Face Value | = | $ 1,000.00 | ||||
| 2) | Price of bod | =-PV(rate,nper,pmt,fv) | ||||||
| = $ 1,058.17 | ||||||||
| Where, | ||||||||
| rate | = | Discount rate | = | 7.56% | ||||
| nper | = | Number of period | = | 5 | ||||
| pmt | = | Coupon Payment | = | $ 90.00 | ||||
| fv | = | Face Value | = | $ 1,000.00 | ||||
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