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The Arnold National Bank has a bond portfolio that consists of bonds with 5 years to...

The Arnold National Bank has a bond portfolio that consists of bonds with 5 years to maturity and a 9 percent coupon rate having a face value of $1,000. These bonds are selling in the market for $1,126. Coupon payments are made annually on this bond.

What is the yield to maturity on these bonds?

Please show the steps on how to solve this without using Excel.

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Answer #1

Ytm=[90+(1000-1126)/5] / [1000+1126/2]

=64.8/1063

=6.09 or 6. 10

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