Question

1. What is the price of a 6% coupon rate, 10 year maturity bond if the YTM=5%? (FV=1000)

2. What is the yield on a discount basis of a 2 year discount bond with a price of $965? (FV=1000)

3. You just bought a car and took out a 72 month loan to pay for it. If you borrowed $20,000 and your annual interest rate is 3.70%, what are your monthly payments?

4. What is the YTM of a 5 year bond with a 3% coupon rate if the price is $1040? (FV=1000)

Answer 1

1.

Using financial calculator BA II Plus - Input details:	#
I/Y = Rate or yield / frequency of coupon in a year =	5.000000
PMT = Coupon rate x FV / frequency =	-$60.00
N = Number of years remaining x frequency =	10
FV = Future Value =	-$1,000.00
CPT > PV = Present value of bond =	$1,077.22

2.

Using financial calculator BA II Plus - Input details:	#
FV = Future value =	-$1,000.00
PV = Present Value =	$965.00
N = total number of payments =	2
PMT = Payment =	$0.00
CPT > I/Y = YTM =	1.7973
Yield in percentage form =	1.80%

3.

Using financial calculator BA II Plus - Input details:	#
I/Y = Rate/Frequency =	0.308333
FV = Future value =	$0
N = Total payment term x Frequency =	72
PV = Present value of Loan =	-$20,000.00
CPT > PMT =Monthly Payment =	$310.18

4.

Using financial calculator BA II Plus - Input details:	#
FV = Future value =	-$1,000.00
PV = Present Value =	$1,040.00
N = total number of payments =	5
PMT = Payment =	-$30.00
CPT > I/Y = YTM =	2.1477
Yield to Maturity in percentage form =	2.15%