Question I need number 12 solved. This is what question 10 says. (yield to matur
ID: 2642762 • Letter: Q
Question
Question
I need number 12 solved.
This is what question 10 says.
(yield to maturity) Citigroup has outstanding an issue of $1,000.00 face value, 8.45% coupon bonds which mature in 16 years. Calculate the bond's yield to maturity if its current market price is. 800,1,000,1,150 1,300
I NEED THE FOLLOWING QUESTION ANSWERED.
Assume you purchase one Citigroup bond of problem 10, hold it for 2 years, and sell it for $1,200.00. For each of the four purchase prices given, calculate your holding-period yield.
Explanation / Answer
Maturity period =16 years
Interest Rate=8.5%
If the CMP of the bond is 800, let the face value be Rs.1000
=84.50*PVAF (8.45%,16years)+(1000-800)*pvf(16 years,8.45%)
=84.50*8.6023+200*0.273=780.60
Yield to maturity=780/800*100=97.5%
If the current market price is 1000
Yield to maturity=84.50*8.6023+(1000-1000)*0.273
=727/800*100
=90.875%
If the current market price is 1150
=84.50*8.6023+(1000-1150)*0.273
=727-40.95
=686/800*100
=85.75%
If the current market price is 1300
Yield to maturity=84.50*8.6023+(1000-1300)*0.273
=727-82
=645/800*100
=80.625%
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