Answer:
The yield to maturity is 9.32%
Explanation:
In calculating the yield to maturity, I made use of rate formula in excel, which is given rate(nper,pmt,-pv,fv)
the nper is the duration of the bond, 15 years multiplied by 2 as the 2 reflects that coupon interest is paid twice a year.
pmt is the periodic coupon interest payable by the bond ,which 8%/2*$1000=$40
pv is the current price of the bond at $894.60
fv is the face value of $1000
rate(30,$40,-$894.60,1000)
rate=4.66% semi annually
rate=2*4.66%=9.32% per year
find attached.
