Jack Wong purchased a five-year bond today at $991.62. The bondpays 6.5 percent semi-annually. What...

Jack Wong purchased a five-year bond today at $991.62. The bond pays 6.5 percent semi-annually. What will be the yield to maturity?

Expert Solution

Price of the bond = $991.62

Face value = $1,000

Coupon payment = 1,000 * 0.065/2 = $32.5

n = 5 * 2 = 10 semi-annual payments

PV = -991.62

FV = 1,000

PMT = 32.5

N = 20

CPT I/Y

I/Y = 3.350002%

Yield to maturity = 3.350002% * 2

Yield to maturity = 0.06700004

Yield to maturity = 6.700004%

jeff jeffy answered 2 years ago

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