Calculate the yield to maturity on the following bonds: A 9.7 percent coupon (pa

ID: 2816857 • Letter: C

Question

Calculate the yield to maturity on the following bonds:

A 9.7 percent coupon (paid semiannually) bond, with a $1,000 face value and 22 years remaining to maturity. The bond is selling at $950.

An 10.2 percent coupon (paid quarterly) bond, with a $1,000 face value and 10 years remaining to maturity. The bond is selling at $904.

An 9.2 percent coupon (paid annually) bond, with a $1,000 face value and 10 years remaining to maturity. The bond is selling at $1,054.

(For all requirements, do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.161))

Calculate the yield to maturity on the following bonds:

A 9.7 percent coupon (paid semiannually) bond, with a $1,000 face value and 22 years remaining to maturity. The bond is selling at $950.

An 10.2 percent coupon (paid quarterly) bond, with a $1,000 face value and 10 years remaining to maturity. The bond is selling at $904.

An 9.2 percent coupon (paid annually) bond, with a $1,000 face value and 10 years remaining to maturity. The bond is selling at $1,054.

(For all requirements, do not round intermediate calculations. Round your answers to 3 decimal places. (e.g., 32.161))

Calculation of yield to maturity

YTM = [Interest per period +((Face value-current market price)/periods remainin to maturity)] / [Face value*.4+current market price*.6]

Bond 1

YTM = [48.50 +((1000-950)/44)] / [(1000*.4+950*.6]

= (48.50+1.1364)/970

= .05117

= 5.117%

Bond 2

YTM = [25.50 +((1000-904)/40)] / [(1000*.4+904*.6]

= (25.5+2.4)/942.4

= 27.9/942.4

= .02961

= 2.961%

Bond 3

YTM = [92 +((1000-1054)/10)] / [(1000*.4+1054*.6]

= (92-5.4)/1032.4

= 86.6/1032.4

= .08388

= 8.388%

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.