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Determine the yield to maturity of a 6.5% coupon, 30-year maturity, $100 face value bond selling for $108. Assume semiannual compounding.
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Determine the yield to maturity of a 6.5% coupon, 30-year maturity, $100 face value bond selling for $108. Assume semiannual compounding.

User Stanislav Pankevich
by
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1 Answer

2 votes

Answer:

the yield to maturity is 5.92%

Step-by-step explanation:

The computation of the yield to maturity is shown below:

Given that

NPER = 30 × 2 = 60

PMT = $100 × 6.5% ÷ 2 = $3.25

Present Value = $108

Future Value = $100

The formula is shown below:

= RATE(NPER:PMT;-PV;FV;type)

After applying the above formula

The yield to maturity is

= 2.96% × 2

= 5.92%

hence, the yield to maturity is 5.92%

User Lev Khomich
by
5.8k points
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