Question

Yield to maturity. What is the yield of each of the following​ bonds​, if interest​ (coupon) is paid annual​ly?

a. What is the yield of the following bond if interest​ (coupon) is paid annual​ly? ​(Round to two decimal​ places.)

Data Table

Par Value	Coupon Rate		Years to Maturity	Yield to Maturity	Price
​$1,000.00	10​%		30	​?	​$900.00
​$5,000.00	6​%		10	​?	​$5,300.00
​$5,000.00	8​%		10	​?	​$5,730.00
​$1,000.00	7​%		5	​?	​$800.00

Answer 1

a.Annual coupon=1000*10%=100

Approx Yield to maturity=[Annual coupon+(Face value-Present value)/time to maturity]/(Face value+Present value)/2

=[100+(1000-900)/30]/(1000+900)/2

=11.17%(Approx)

b.Annual coupon=5000*6%=300

Approx Yield to maturity=[Annual coupon+(Face value-Present value)/time to maturity]/(Face value+Present value)/2

=[300+(5000-5300)/10]/(5000+5300)/2

=5.21%(Approx)

c.Annual coupon=5000*8%=400

Approx Yield to maturity=[Annual coupon+(Face value-Present value)/time to maturity]/(Face value+Present value)/2

=[400+(5000-5730)/10]/(5000+5730)/2

=6.01%(Approx)

d.Annual coupon=1000*7%=70

Approx Yield to maturity=[Annual coupon+(Face value-Present value)/time to maturity]/(Face value+Present value)/2

=[70+(1000-800)/5]/(1000+800)/2

=12.64%(Approx)