1 Calculate the YTM Bond YieldsExcel Sign In FILE HOME INSER

1. Calculate the YTM. Bond Yields-Excel Sign In FILE HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIEW .111 ??? A A Alignment Number Conditional Format as Cell Cells Editing Formatting Table Styles Styles Clipboard G A1 Stone Sour Corp issued 20-year bonds two years ago at a coupon rate of 7.1 percent. The bonds make serniannual payments. If these bonds currently sell for 105 percent of par value, what is the YTM? 1/1/2000 1/1/2018 7.10% Settlement date Maturity date Annual coupon rate71 Coupons per year Face value (% of par) Bond price (% of par) 10 100 105 12 13 14 15 16 17 Complete the following analysis. Do not hard code values in your answers. Yield to maturifty 19 20 21 sheeti

Solution

If we go by the formula for calculating the YTM of a bond, then YTM = (C + ( F - P ) / n) / (F+P)/2

So we have semiannual coupons, so C = 36.5. F = 1000, P will be the price at settlement date = 1050.

SO the YTM = 3.425%. But this is semiannual yield. So annual YTM = 6.85%