Question
In: Finance
A bond that matures in 6 years has an 8 percent coupon rate,semiannual payments, a...
A bond that matures in 6 years has an 8 percent coupon rate, semiannual payments, a face value of $1,000, and a 7.7 percent current yield. What is the bond’s nominal yield to maturity (YTM)?
Solutions
Expert Solution
We will use the financial calculator to compute the YTM. First, we will compute the current market price
Current market yield = Annual coupon payment/ Current price of the bond
7.7% = $80/ Current price of the bond
Current price of the bond = $1038.96 or approx. $1039
FV = $1000
PV = $1039
N = 12 (converted into semi annual periods)
PMT = $40 (converted into semi annual payments)
YTM = 7.2%
jeff jeffy answered 2 years agoRelated Solutions
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