Question

An 8% semiannual coupon bond matures in 4 years. The bond has a face value of $1,000 and a current yield of 8.3505%. What are the bond's price and YTM

Answer 1

Step-by-step explanation:

Par value = $1000

coupon 8 % = $80

maturity = 4 years

frequency = 2 ( semi annual )

current yield = 8.3505

Bond price = 80 / .083505

= $958

ytm of the bond can be calculated with the help of ytm calculator

It is the discount rate at which the present value of cash flow equals the

bond price .

It turns out to be 9.28 %

ytm = 9.28 %.