Question

Shawna Carter wants to invest her recent bonus in an 8-year bond that pays a coupon...

Shawna Carter wants to invest her recent bonus in an 8-year bond that pays a coupon of 5 percent semiannually. The bonds are selling at $988.15 today. If she buys this bond and holds it to maturity, what would be her yield? (Round to the closest answer.)

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Answer #1

Yield = 5.1828%

Use RATE function in excel as follows and then multiply by 2 to annualise (semi-annual payments)

Nper = 8 * 2

Pmt = 1000 * 5% / 2

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