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28 September, 18:32

Clock and Cane Company. has 6.8 percent, semiannual coupon bonds on the market with twelve years left to maturity, face value of $1000. If the bond currently sells for $989.45, what is its YTM

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  1. 28 September, 21:05
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    YTM is 6.90%

    Explanation:

    The yield to maturity on the bond can be computed using the rate formula in excel.

    =rate (nper, pmt,-pv, fv)

    nper is the time to maturity of 20 years multiplied by 2 since the bond is paying interest on semi-annual basis

    pmt is the semi-annual interest receivable by investor which 6.8%/2*$1000=$34

    pv is the current market price of $989.45

    fv is the face value of $1000

    =rate (40,34,-989.45,1000)

    rate=3.45%

    The 3,45% is the semi-annual YTM, whereas the annual YTM 3.45% * 2=6.90%
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Home » Business » Clock and Cane Company. has 6.8 percent, semiannual coupon bonds on the market with twelve years left to maturity, face value of $1000. If the bond currently sells for $989.45, what is its YTM
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