A 87 percent coupon paid semiannually bond with a 1000 face

A 8.7 percent coupon (paid semiannually) bond, with a $1,000 face value and 11 years remaining to maturity. The bond is selling at $920. (Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161))

An 5.8 percent coupon (paid quarterly) bond, with a $1,000 face value and 10 years remaining to maturity. The bond is selling at $910. (Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161))

An 7.8 percent coupon (paid annually) bond, with a $1,000 face value and 8 years remaining to maturity. The bond is selling at $1,060. (Do not round intermediate calculations. Round your answer to 3 decimal places. (e.g., 32.161))

Solution

1A) Just Simple caluclation using a Financial Caluclator (EXample Texas BA 2 plus caluclator)

Entervalues in the caluclator as below

Enter N is equal to 11 ; Coupon 8.7 (Semi annual); Price 920 ;and Face Value 1000

Caluclate YTM (In the caluclator)

We get YTM as 9.91%

So YTM is 9.91%

2A) In the similar way here

Enter N is equal to 10 ;Bond price 910; Coupon 5 .8%(Quarterly); FV 1000

Caluclate YTM

We get YTM as 7.063%

3) In the same way we can Enter values as

N is equal to 8; Coupon 7.8 (Annual); Price 1060; FV 1000

Caluclate YTM (In calculator)

We get YTM as 6.083%

so YTM is 6.083%

Note: This is easiest way to find YTM when N, Price, and coupon are given. We can use Financial Caluclators. But be careful when handling coupon periods. Whether coupon is semi annual, annual, and quarterly or monthly.

Enter N is equal to 10 ;Bond price 910; Coupon 5 .8%(Quarterly); FV 1000

Caluclate YTM

We get YTM as 7.063%

so YTM is 7.063%

3) Here

N is equal to 8 ; coupon 7.8 (Annual) ; Price 1060; FV 1000

Caluclate YTM

YTM (as per caluclator )is 6.803%

so YTM is 6.803%

3A) For this question

N is equal to 8(Annual)