Question

NEED HELP ASAP

You find the following Treasury bond quotes. To calculate the number of years until maturity, assume that it is currently May 2019 and the bond has a par value of $1,000. Rate Maturity Mo/Yr Bid Asked Chg Ask Yld ?? May 24 103.4690 103.5418 +.3093 6.119 5.524 May 29 104.5030 104.6487 +.4365 ?? 6.193 May 39 ?? ?? +.5483 4.151 In the above table, find the Treasury bond that matures in May 2029. What is your yield to maturity if you buy this bond? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Answer 1

4.93%

Step-by-step explanation:

For computing the yield to maturity we need to apply the RATE formula i.e to be shown in the attachment below:

Provided that,

Present value = $1,046.487

Future value or Face value = $1,000

PMT = 1,000 × 5.524% ÷ 2 = $27.62

NPER = 10 years × 2 = 20 years

The 10 years is come from

= May 2029 - May 2019

= 10 years

The formula is shown below:

= Rate(NPER;PMT;-PV;FV;type)

The present value come in negative

So, after applying the above formula,

The yield to maturity is

= 2.46% × 2

= 4.93%