Question

1. В Bonds - April 2019 Below is information about various bonds as of April 4, 2019, retrieved from www.schwab.com. The par value of the bonds is $1,000 Yield to S&P Rat- Semi- Issuer Years to Coupon Maturity |(%) Price Name Maturity ing annual? 2.400% $990.70 Amazon 3.875 А- Yes Macy's 6.900% 10.000 ВВ- 5.925% Yes Use this information to complete the table below, and then answer the questions that follow What is the yield to maturity for Amazon bonds? YTM /Price Calculation Issuer Name PV PMT FV 1.327% -$990.70 $12.00 $1,000 Amazon 7.75 $1,000 2.963% -$1,072.76 $34.50 Macy's 20.00 Amazon YTM = |*2 2.654% Solving for I gives you the semiannual interest rate. Multiply I by 2 to get YTM When solving for the price of a semiannual bond, you need to divide I by 2 to get the semiannual interest rate.

Please explain how the information in the first table was used to get the answers for the second table in detail.

Answer 1

Using financial calculator
1.
AMAZON
N=3.875*2
PMT=2.4%*1000/2
FV=1000
PV=-990.70
CPT I/Y=1.327%

Hence, YTM=1.327%*2=2.654%

2.
MACY's
N=10*2
PMT=-6.9%*1000/2
FV=-1000
I/Y=5.925%/2
CPT PV=1072.77979