Question

You find the following corporate bond quotes. To calculate the number of years until maturity, assume that it is currently January 15, 2019. The bonds have a par value of $2,000 and semiannual coupons.

Company (Ticker)	Coupon	Maturity	Last Price	Last Yield	EST $ Vol (000’s)
Xenon, Inc. (XIC)	6.00	Jan 15, 2031	94.255	??	57,368
Kenny Corp. (KCC)	7.18	Jan 15, 2028	??	6.14	48,947
Williams Co. (WICO)	??	Jan 15, 2035	94.795	6.96	43,808

What is the yield to maturity for the bond issued by Xenon, Inc.? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer 1

Years to maturity	12
Par/Face value	2000
Annual Coupon rate	0.06
Annual coupon	120
semi-annual coupon	60
Present Value = Future value/[(1+(r/m))^mt]
r is the yield to maturity.
m is the compounding period that is 2
mt is the time period.
quoted price of the bond	94.255
When the bond price is quoted as 94.255 that indicates that it is selling at 94.255 percent of the face value of $2000.
The price of the bond is $1885.1.
price of the bond = sum of present values of future cash flows
Use excel to find the yield to maturity.
r/2	0.033521	r	0.067042
mt	1	2	3	4	5	6	7	8	9	10	11	12	13	14	15	16	17	18	19	20	21	22	23	24
future cash flow	60	60	60	60	60	60	60	60	60	60	60	60	60	60	60	60	60	60	60	60	60	60	60	2060
present value	58.05397	56.17106	54.34922	52.58647	50.88089	49.23063	47.6339	46.08895	44.59411	43.14775	41.74831	40.39425	39.08411	37.81647	36.58994	35.40319	34.25493	33.14391	32.06893	31.02881	30.02243	29.04869	28.10653	933.6925
sum of present values	1885.1
The yield to maturity of the bond issued by Xenon Corp is 6.70%.