A 15-year maturity bond with par value of $1,000 makes annual coupon payments at

Question

A 15-year maturity bond with par value of $1,000 makes annual coupon payments at a coupon rate of 10%. Find the bond equivalent and effective annual yield to maturity of the bond for the following bond prices. (Round your answers to 2 decimal places. Omit the "%" sign in your response.)

A 15-year maturity bond with par value of $1,000 makes annual coupon payments at a coupon rate of 10%. Find the bond equivalent and effective annual yield to maturity of the bond for the following bond prices. (Round your answers to 2 decimal places. Omit the "%" sign in your response.)

Explanation / Answer

Bond yield (Using excel formula) = rate(nper,pmt,pv,fv) * 2

IF COUPON PAYMENT IS ANNUAL THEN BOND EQUIVALENT YIELD AND EFFECTIVE RATE WILL BE SAME AS PER BELOW:

a) =RATE(15,100,-930,1000) = 10.97%

b) =RATE(15,100,-1000,1000) = 10%

c) =RATE(15,100,-1030,1000) = 9.61%

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