Problem WalkThrough Price and yield An 8 semiannual coupon b

Problem Walk-Through Price and yield An 8% semiannual coupon bond matures in 4 years. The bond has a face value of $1,000 and a arent yield of 8.1410%. What is the bond\'s price? Round your answer to the nearest cent. What is the bond\'s YTM? (Hint: Refer to Footnote 7 for the definition of the current yield and to Table 7.1.) Round your answers to two decimal places.

Solution

bonds price = 80/0.08141 = 982.6803

PV = -982.6803, FV = 1000, PMT = 40, N = 8

use rate function in Excel and multiply by 2

YTM = 8.52%

2.

a FV = 1000, PMT = 100, n = 6, PV = -879

use rate funciton in Excel

YTM = 13.03%

b. replace PV with -1170

YTM = 6.49%

max of 4 subsections can be answered