Question

A 20-year maturity bond with face value of $1,000 makes annual coupon payments and has a coupon rate of 10.00%. (Do not round intermediate calculations. Enter your answers as a percent rounded to 3 decimal places.)

a. What is the bond’s yield to maturity if the bond is selling for $1,100? Yield to maturity %

b. What is the bond’s yield to maturity if the bond is selling for $1,000? Yield to maturity %

c. What is the bond’s yield to maturity if the bond is selling for $1,300? Yield to maturity %

Answer 1

we have to use financial caltulator to solve this problem
put in calculator for each case
		Case -a		Case -b		Case -c
PV		-1100		-1000		-1300
FV		1000		1000		1000
N		20		20		20
PMT	1000*10%	100		100		100
compute I		8.911%		10.000%		7.138%
therefore YTM =		8.911%		10.000%		7.138%