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A​ bond's market price is ​$850. It has a ​$1,000 par​ value, will mature in 6...

A​ bond's market price is ​$850. It has a ​$1,000 par​ value, will mature in 6 ​years, and has a coupon interest rate of 8 percent annual​ interest, but makes its interest payments semiannually.

What is the​ bond's yield to​ maturity?

What happens to the​ bond's yield to maturity if the bond matures in 12 ​years?

What if it matures in 3 ​years?

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Answer #1

Ans:- we will use the RATE function of excel to find the YTM.

For:-(a) Nper=6*2=12, Pmt=$1000*8%/2=$40, PV=-$850, FV=$1000.

For:-(b) Nper=12*2=24, Pmt=$1000*8%/2=$40, PV=-$850, FV=$1000.

For:-(c) Nper=3*2=6, Pmt=$1000*8%/2=$40, PV=-$850, FV=$1000.

Note:- If this answer helps you pls give thumbs up.

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