Calculate the yield to maturity. The bond is a 20-yr 6% semiannual bond with $100 par...

Question

Question

Calculate the yield to maturity. The bond is a 20-yr 6% semiannual bond with $100 par and is currently trading at $95.

business finance

Answer 1

Answer #1

K = Nx2

Bond Price =∑ [(Semi Annual Coupon)/(1 + YTM/2)^k] + Par value/(1 + YTM/2)^Nx2

k=1

K =20x2

95 =∑ [(6*100/200)/(1 + YTM/200)^k] + 100/(1 + YTM/200)^20x2

k=1

YTM% = 6.45

Answer 2

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