The market price is $1075 for a 12-year bond ($1000 par value) that pays 11 percent...

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The market price is $1075 for a 12-year bond ($1000 par value) that pays 11 percent...

The market price is $1075 for a 12-year bond ($1000 par value) that pays 11 percent annual interest, but makes interest payments on a semiannual basis (5.5 percent semiannually). What is the bond's yield to maturity?

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Answer 1

Answer #1

using excel rate functions

Yield to maturity

= RATE(number_of_periods, payment_per_period, present_value, [future_value], [end_or_beginning], [rate_guess]) * number of compounds

= RATE(12*2,110/2,-1075,1000)*2

= 9.92%

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Answer 2

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