watters umbrella corp issued 15 yr bonds 2 years ago at a coupon rate of 5.9 percent. the bonds make semiannual payments. if these bonds currently sell for 105% of par value what is the ytm?
Answers
Answered by
6
Answer:
. Watters Umbrella Corp. issued 15-year bonds 2 years ago at a coupon rate of 9.1 percent. The bonds make semiannual payments. If these bonds currently sell for 103 percent of par value, what is the YTM? SHOW ALL WORK!
YTM = rate(nper,pmt,pv,fv) * 2
Where,
nper (No of half year left to maturity) = 13 Year * 2 = 26
pmt (Semi Annual Coupon Amount) = 9.1%*1000*1/2 = 45.50
pv (present Value of bond) = 103%*1000 = 1030
fv ( Maturity Value) = 1000
YTM = rate(26,45.50,-1030,1000)*2
YTM = 8.71%
Similar questions