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barxatty [35]
3 years ago
5

A 4.8% coupon bond with 9 years remaining until maturity is currently trading at $1087.43. Assume semi-annual coupon payments. T

he bond's YTM is __________%. Round your *final* answer to 2 decimal places (example: 12.34). Hint: be sure your inputs reflect the semiannual payment frequency.
Business
1 answer:
eduard3 years ago
6 0

Answer:

3.66%

Explanation:

The yield to maturity can be computed using Excel rate function below:

=rate(nper,pmt,-pv,fv)

nper is the number of semiannual coupons in 9 years i.e 9*2=18

pmt is the amount of semiannual coupon =$1000*4.8%*6/12=24

pv is the current price which is $1087.43

face value is $1000

=rate(18,24,-1087.43,1000)

rate=1.83% (semiannual yield)

annual yield=1.83%*2

annual yield=3.66%

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