Question

Suppose that a bond has one year to maturity. The yield to maturity on the bond if it was bought for $1110.00 and has a $1100 face value with a coupon rate of 11% is__________ %. (Round your response to the nearest whole number)

Consider a coupon bond with a face value of $1350, one year to maturity and a coupon rate of 8%. Given a yield to maturity of 7%, the price the bond will sell for is $________ .

Answer 1

Answer:

1. Face value = $1,100, Coupon rate = 11%, Nper = 1, PMT = $121 (1,100*11%), PV = $1,110

Yield of maturity = Rate(NPER. PMT, -PV, FV)

Yield of maturity = Rate (1, $121, -$1110, $1100)

Yield of maturity = 10%

2. Face value = $1,350, Coupon rate = 8%, Nper = 1, PMT = 108(1350*8%), Yield = 7%

Price of the bond = PV(rate, nper, pmt, fv)

Price of the bond = PV(7%, 1, 1,108, 1350)

Price of the bond = $1,362.62