PRICE AND YIELD An 8 semiannual coupon bond matures in 5 yea

PRICE AND YIELD An 8% semiannual coupon bond matures in 5 years. The bond has a face value of $1,000 and a current yield of 8.1109%. What is the bond\'s price? Do not round intermediate calculations. 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.) Do not round intermediate calculations. Round your answers to two decimal places. %

Solution

price = 80/0.081109 = 986.327

PV = -986.327, FV = 1000, N = 10, PMT = 40

use rate function in Excel and multiply by 2

YTM = 8.34%