78%-) Sun 8:36 AM a E mathal.com Fin320 F1713 Test: Valuation Exam Time Remainin
ID: 2781036 • Letter: 7
Question
78%-) Sun 8:36 AM a E mathal.com Fin320 F1713 Test: Valuation Exam Time Remaining: 00:53:47 Submit Test This Question: 1 pt 23 of 25 (3 complete) This Test: 25 pts possible The Sisyphean Company has a bond outstanding with a face value of $5,000 that reaches maturity in ten years. The bond certificate indicates that the stated coupon rate for this bond is 8% and that the coupon payments are to be made semiannually. Assuming that this bond trades for $5,427, then the YTM for this bond is closest to: A. 6.81% OB. 5.4% C. OD. 8.17% 9.53% Click to select your answer d not 5Explanation / Answer
Semi-annual coupon is = (5000* .08)/2
= 400/2
= 200
Price of the bond = 5427
YTM can be calculated by using Excel.
Year
Cash flow
0
-5427
1
200
1
200
2
200
2
200
3
200
3
200
4
200
4
200
5
200
5
200
6
200
6
200
7
200
7
200
8
200
8
200
9
200
9
200
10
200
10
5200
IRR
3.404%
Annual YTM
6.81%
Correct answer is A.
Year
Cash flow
0
-5427
1
200
1
200
2
200
2
200
3
200
3
200
4
200
4
200
5
200
5
200
6
200
6
200
7
200
7
200
8
200
8
200
9
200
9
200
10
200
10
5200
IRR
3.404%
Annual YTM
6.81%
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