Question

There is a bond that has a quoted price of 110.547 and a par value of $2,000. The coupon rate is 7.05 percent and the bond matures in 19 years. If the bond makes semiannual coupon payments, what is the YTM of the bond?

Answer 1

the YTM of the bond is 127.55 %

Step-by-step explanation:

The YTM of the bond is the Market return that similar Bond Holders expect from the bond.

This can be calculated using a Financial calculator as :

PV = - $ 110.547

FV = $2,000

PMT = $2,000 x 7.05 % x 1/2 = $70.50

N = 19 x 2 = 38

P/yr = 2

YTM = ???

Therefore, the YTM of the bond is 127.55 %