What is the YTM on a 10%, 20-year simi-annual coupon bond that that currently trades for...

What is the YTM on a 10%, 20-year simi-annual coupon bond that that currently trades for $1,013?

Expert Solution

Bond price =C*[1-(1+YTM)^-n / YTM] + [P/(1+YTM)^n]

Where,
C= Coupon amount
YTM = Yield To maturity
n = Number of periods
P= Par value

$1013=50 * [1 - (1 + YTM)^-40 / YTM] + [1000 / (1 + YTM) ^40]
1013/50 =[1 - (1 + YTM)^-40 / YTM] + [1000 / (1 + YTM) ^40]
20.26 =[1 - (1 + YTM)^-40 / YTM] + [1000 / (1 + YTM) ^40]

YTM =	4.93%
Annually	9.85%

jeff jeffy answered 3 years ago

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