Question

****PLEASE SHOW IN EXCEL***

4. Johnson Jay Inc. issues a 9 percent coupon bond with 24 years maturity, $1,000 face (par) value, and semi-annual coupon payments. If the current market price of this bond is $751, find its yield to maturity.

A. 12.23%

B. 8.34%

C. 12.95%

D. 7.98%

E. none of the answers is correct

Answer 1

K = Nx2

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

k=1

K =24x2

751 =∑ [(9*1000/200)/(1 + YTM/200)^k]     +   1000/(1 + YTM/200)^24x2

k=1

YTM% = 12.23

=RATE(G24*E2,0.09*1000(2*100),-751,1000,,)*2