Solution- First we calculate coupon payment as follow.... YTM = 7.3% or 7.3% / 2

Question

Solution- First we calculate coupon payment as follow.... YTM = 7.3% or 7.3% / 2 = 3.65% Years = 13.5 years or 13.5*2 = 27 Semiannual periods P = $1,080 = C(PVIFA3.65%,27) + $1,000(PVIF3.65%,27) P = $1,080 = C(16.9900) + $1,000(0.3799) P = $41.20 Since, The rate as per the semiannual coupon payment, now annual coupon payment....... P = 2*$41.20 P = $82.40 So, The Coupon Rate calculated as follows.... Coupon Rate = $82.40 / $1,000 Coupon Rate = 0.0824 or 8.24%

PLEASE EXPLAIN WHAT P IS EQUAL TO IN STEPS TO

WHAT DO YOU PUT INTO THE TI BA II PLUS. BREAK IT DOWN IN STEPS. THANK YOU

Explanation / Answer

Answer:

here since they are calulating the YTM and it is given as 7.3% . The Yield to maturity cvan be calulated only when you have the principal amount invested therefore P stands for the initail investment made by the investor . Therefore p is the present value of the bond or share for which the investment can be made .

If an investor wants to make investment then he or she should not make in vestment if the price of the instrument is more than the P .ie the intrinsic value of the instrument.

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