Question

You just purchased a $1,000 par value, 10-year, 9.3 percent annual coupon bond that pays interest on a semiannual basis. The bond sells for $974. What is the bond’s nominal yield to maturity (enter answer as a percentage)?

Answer #1

We can use this equation and put the values,

Po = $974

C= 9.30%*1000

m=2

n=10

F=$1000

and can get the value of YTM.

**Second method is we can use Excel's RATE function as
used below:**

The YTM given by excel is semi-annual yield.

Hence annual YTM is 2*4.86% = **9.72%**

**Note: Give it a thumbs up if it helps! Thanks in
advance!**

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