A bond has a 11% coupon rate with semi-annual coupons and matures in 9 years. The...

A bond has a 11% coupon rate with semi-annual coupons and matures in 9 years. The bond has a $1,000 face value and a current yield of 14.37%.

What is the bond's price?

What is the bond's yield to maturity? Enter your answer as a decimal.

Expert Solution

a.	Bond's Price		$ 765.48


	Working;

	# 1	Annual coupon payment		=	Face value * Coupon rate
				=	$ 1,000.00	*	11%
				=	$ 110.00

	# 2	Bond's Price		=	Annual coupon payment / current yield
				=	$ 110.00	/	14.37%
				=	$ 765.48

b.	Yield to maturity		0.1601

	Working;

	Yield to maturity			=	=rate(nper,pmt,-pv,fv)*2
				=	0.1601

	Where,
	nper	Number of period		=	18
	pmt	Coupon payment		=	$ 55.00
	pv	Current price		=	$ 765.48
	fv	Face value		=	$ 1,000.00

jeff jeffy answered 1 year ago

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