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The answer is 5.98, but please show me how to do it on the formula that i sent to get a thums up.
Acoupon bond that has a $1,000 par value and a coupon rate of 10%. The bond is ellin for $1.250 and has eight years to maturity. What is the bonds yield to maturity? (An equation is sufficient.) 3 currently
3. Coupon Bond Using the same strategy used for the fixed-payment loan: P price of coupon bond C yearly coupon payment F face value of the bond nyears to maturity date
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Answer #1

YTM = [Coupon + (F.V - Price)/n ] / (FV+Price)/2

= [100 + (1000-1250)/8 ] / (1000+1250)/2

=[100 - 31.25] / 1125

=68.75 / 1125

=6.1%

Note- YTM equation is only for approx rate, it can never be precise, although i have also included the excel formula to arrive at the answer:

=RATE(8,100,-1250,1000)

=5.98%

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