Answered

What is the yield to maturity of a eight​-year, $ 10 comma 000 bond with a 4.5​% coupon rate and semiannual coupons if this bond is currently trading for a price of $ 8 comma 840​?

Answer :

truonghanhduyen

Answer:

yield to maturity is 6.37%

Explanation:

Face value (FV): $10,000

Coupon rate: 4.5% -> counpon received semi-annually  = $10,000 * 4.5%/2  = $225 (PMT)

Tenor: 8 years -> number of payments (NPer): 16

The price of bond today is $8,840 (PV)

We can use excel to calculate the rate as YTM (yeild to maturity)

= Rate(Nper,PMT,-PV,FV) = rate(16,225,-8840,10000)

= 3.19% (semi-annual)

-> annual rate or YTM = 6.37%

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