Your firm has just issued a 20-year $1,000 par value, 10% semi- coupon bond for

Question

Your firm has just issued a 20-year $1,000 par value, 10% semi- coupon bond for a net price of $914.00. What is the yield to maturity? Answer                                         
           10.44%                             
           1.50%                             
           12.49%                             
           11.08%         Your firm has just issued a 20-year $1,000 par value, 10% semi- coupon bond for a net price of $914.00. What is the yield to maturity? Answer                                         
           10.44%                             
           1.50%                             
           12.49%                             
           11.08%         Your firm has just issued a 20-year $1,000 par value, 10% semi- coupon bond for a net price of $914.00. What is the yield to maturity? Answer                                         
           10.44%                             
           1.50%                             
           12.49%                             
           11.08%         Your firm has just issued a 20-year $1,000 par value, 10% semi- coupon bond for a net price of $914.00. What is the yield to maturity? Your firm has just issued a 20-year $1,000 par value, 10% semi- coupon bond for a net price of $914.00. What is the yield to maturity? 10.44% 1.50% 12.49% 11.08%                             
           10.44%                             
           1.50%                             
           12.49%                             
           11.08%

Explanation / Answer

Hi,

Please find the answer as follows;

Nper = 20*2 = 40

PMT = 1000*.10*1/2 = 50

PV = -914

FV = 1000

Rate = ?

YTM = Rate(Nper,PMT,PV,FV) = Rate(40,50,-914,1000)*2 = 11.08%

Answer is 11.08%

Thanks

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