Question

A​ $5000, 14.5% bond with​ semi-annual coupons redeemable at par on August​ 1, 2022, was purchased on March​ 5, 2011, at 95.5. What was the approximate yield​ rate?

The approximate yield rate was?

​(Round the final answer to four decimal places as needed. Round all intermediate values to four decimal places as​ needed.)

Answer 1

	YTM	=	C+(F-P/N)
			F+P/2
	here,
	C=100*0.145/2=7.25 (divided by 2 because payment is semi annual)
	Price=95.5
	N=22.8333 (since payment is semi annual)
		137months to maturity/6months=22.8333 (4 days ignored due to approximation)
	F=redemption price
	Approx YTM             =		7.25+[(100-95.5)/22.8333]
	(for 6 months)		(100+95.5)/2
		=	0.0762
	Approx YTM
	(annual)	=	0.0762*2=0.1524
			or 15.2368% Note Please upvote the answer if you like it.