Question

A 20-year maturity bond with par value of $1,000 makes semiannual coupon payments at a coupon rate of 6%. Find the bond equivalent and effective annual yield to maturity of the bond for the following bond prices. (Round your answers to 2 decimal places.) Bond Prices Bond Equivalent Annual Yield to Maturity Effective Annual Yield to Maturity a. b. c. $ $ $ 930 1,000 1,030

Answer 1

1 Bond Prices Bond Equivalent Yield Effective Yield 930 6.64% 6.75% 1000 6.00% 6.09% 1030 5.75% 5.83%

А 1 Bond Prices 2 930 3 1000 4 1030 5 B Bond Equivalent Yield =RATE(20*2,6%*1000/2,-A2,1000)*2 =RATE(20*2,6%*1000/2,-A3,1000)*2 =RATE(20*2,6%*1000/2,-A4,1000)*2 Effective Yield =(1+B2/2)^2-1 =(1+B3/2)^2-1 =(1+B4/2)^2-1