Suppose a bond with a 3% coupon rate and semi annual coupons, has a face value...

Suppose a bond with a 3% coupon rate and semi annual coupons, has a face value of $1000.30 years of two maturity and selling for $945.82. What is the yield to maturity?

Expert Solution

To find the YTM, we need to put the following values in the financial calculator:

N = 2*2 = 4;

PV = -945.82;

PMT = (3%/2)*1000 = 15;

FV = 1000;

Press CPT, then I/Y, which gives us 2.96

So, Periodic Rate = 2.96%

YTM = Periodic Rate * No. of compounding periods in a year = 2.96% * 2 = 5.91%

jeff jeffy answered 2 years ago

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