Question

Andy is considering purchasing a 12-year bond that is selling for $1,300. What is the YTM for this bond if it has an 8% coupon, paid semi-annually?
a. 4.63%.
b. 4.68%.
c. 4.70%.
d. 4.72%.

Answer 1

Answer:

c. 4.70%.

Explanation:

YTM = Rate(PV , FV, N, PMT)

PV = -$1,300, FV = $1000, N= 24(12*2), PMT = 40(1,000*8%/2)

YTM = Rate(-1,300, 1,000, 24, 40)

YTM = 0.047

YTM = 4.70%