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18 September, 14:05

Suppose a ten-year, $ 1 comma 000 bond with an 8.6 % coupon rate and semiannual coupons is trading for $ 1 comma 035.77. a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding) ? b. If the bond's yield to maturity changes to 9.9 % APR, what will be the bond's price? a. What is the bond's yield to maturity (expressed as an APR with semiannual compounding) ? The bond's yield to maturity is nothing %. (Round to two decimal places.)

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  1. 18 September, 16:11
    0
    a. 8.30 %

    b. $918.65

    c. 16,60%

    Explanation:

    a. What is the bond's yield to maturity

    Using a Financial Calculator Enter the following respective values and find i.

    N = 10*2 = 20

    Pmt = $1,000 * 8.6 % / 2 = $43

    P/yr = 2

    Pv = $ 1,035.77

    Fv = $1,000

    YTM / i = ?

    i = 8.30%

    Therefore yield to maturity is 8.30 %

    b. What will be the bond's price

    Using a Financial Calculator Enter the following respective values and find Pv.

    N = 10*2 = 20

    Pmt = $1,000 * 8.6 % / 2 = $43

    P/yr = 2

    Fv = $1,000

    YTM / i = 9.90%

    Pv = ?

    Pv = $ 918.65

    Therefore the bond's price is $918.65

    c. What is the bond's yield to maturity

    bond's yield to maturity - expressed as an APR = 8.30 % * 2

    = 16,60%
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